Five Energy Companies That Spell Opportunity 17 comments
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Believing that Other People’s Problems spell Opportunity for long-term investors, we reinstate five oil and gas buy recommendations including ConocoPhillips (COP), StatoilHydro (STO), PetroChina (PTR), Devon Energy (DVN) and Canadian Oil Sands Trust (COSWF.PK).
Over-leveraged, weakly capitalized investors must sell in a declining market. Strongly capitalized investors can take advantage of those pressures. Strength includes the ability and temperament to withstand further declines. Yet, the bankruptcy of Lehman and the acquisition of Merrill Lynch by Bank of America (BAC) are events as dramatic as any to make the risks of further turmoil obvious to all. The five recommendations are financially strong, geographically diverse and well-represented in North American Natural Gas, Rest of World Natural Gas, Oil Production and Downstream.
Originally published on September 16, 2008.
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This article has 17 comments:
The S&P500 fell about 47.5% after September 1st 2000 (from 1520 pts. to 800pts.) to finally bottom early October, 2002.
The path downward was littered with failed "opportunities for long-term investors" that have not recovered to this day!
So far, we have dropped about 29.5% since last October's top. Those fantastic "opportunities for long-term investors" advocated back in May, 1998 that have survived the past decade are once again breaking even based on the indexes.
Rather than advocating yet another package of "opportunities for long-term investors", why not advocate the characteristics that will produce successful investors and traders in the current environment?
Chief among these are flexibility, quick reactions to changes in the markets, lowered profit thresholds and a patient focus on short-term set-ups with tight stops.
Anyone advocating a long-term, buy and hold investment strategy in this high-risk environment is either a masochist or has far, far more wealth that they can afford to watch dissolve than they deserve!
There may well be short-term opportunities in some of the stocks you recommend. Only the flexible and nimble trader will profit from them.
"Sadly banks/financials will have to lead us out of this mess. Frozen markets require a blow torch which they have just been given.
Sadly green and renewables are less viable with low oil/gas prices.
I had DVN and was in and out riding that magic carpet 1/3 way up, got out and rode it 1/3 of the way down.
China has slowed because we aren't buying.
They are in my funds and that is sufficient at present.
That group can wait a bit more.
People are in denial - they just snuck a carbon tax in a nonrelated bailout of a runaway govern mort program.
He is right that oil might rise in the future - but that is only because as a nation we will be poorer under currency strain and the crush of poor energy planning. When the emerging markets decouple than there will be a real explosion in oil prices - 5 years out. But again that is only because we will backwardize by capping our growth (the most against) all other nations who are going nuclear or building soverign wealth funds from our Treasury - and of course drilling like mad (Norway, Russia).
The oil and gas execs will probably pack up and move their headquarters to Dubai (tax free) like Haliburton where the Fed govern will lose their tax receipts because of the lecture series held by the party of trial lawyers and labor. Seems to me that there is more time before the intergrated oil ever pull ahead . You are better off playing the fake and fast pop in solar coming as the media whips up people for string fans across the Rockies to catch wind or solar panels. Like ethanol that will collapse as it isn't "perfect enough" - someone will find a problem.
It should be a better ride - leave the integrated to migrate to countries with pragmatic and serious electorate - who still aren't debating drilling after 35 years.
Take a look at New Zealand stocks to see what happens under the big govern tent.
Yes, let's take a look at New Zealand.... The NZ50 index has risen about 28% over the last 5 years as compared to the S&P500's 12% over the same time period!
Want to try Canada? Okay, the S&P/TSX is up a whopping 57% over the past 5 years!
Want to try Sweden? Okay, the Stockholm OMXS All Share is up 48% over the last 5 years...
Both New Zealand and Canada instituted "emergency" goods and services taxation 15-20 years ago to tackle what they perceived as a HUGE National Debt problem. At the time, this measure was met with doom and gloom prognostications that it would sink their respective economies. Today, the Canadian National Debt is just over $800Bln or about $18,000 per person, and they're still worried! The USA National debt is running between $33,000 and $37,000 per person depending on just when you choose to cut off the numbers.
I'm not blaming him for the entire problem, but on the day President Bush took office, the national debt stood at $5.727 trillion. The latest number from the Treasury Department (if you choose to believe it) shows the national debt now stands at more than $9.849 trillion. That’s a 71.9 percent increase over the last 71/2 years.
Amazing! It would at least appear on the surface that New Zealand, Sweden and Canada, all countries of "Big Government" are reducing their debt while enjoying eye-popping stock market returns because they actually produce and export more "things" than they import. (Yes, they enjoy a trade surplus).
Our major export appears to have been Treasuries, and it looks like there will be fewer and fewer buyers of our debt.
If we're good traders, we'll make good trades; regardless of who is in the White House!
I would dearly love to be proven wrong here, but I'm having a real hard time understanding your arguments, finmah!
Has the US Govt done anything recently that strengthens the dollar? Hmmm....
Has the US Govt done anything recently that strengthens the dollar? Hmmm....
The last 8 years have had The Internet Bubble, 9-11, a recession, Iraq/Afganistan, the Housing Bubble, a massive unrecognized inflationary food and energy bubble, the ongoing Credit Crunch/Bailouts and Recession in the offing. Toss in hundreds of Billions for Pork, Homeland Security, the Defense Budget, Medicare/Medicade and a few natural disasters like Ivan, Rita, Katrina and now Ike, its a wonder that the past 8 years haven't tripled the National Debt.
Deficits as a percentage of GDP are almost double that of the US, unemployment in the EU averages 7.5%. A few countries like Denmark, Norway, Finland, and Sweden are on the verge of Bankruptcy because of their social programs. Need ultra expensive Medical treatment, fly to Denmark. Free of charge regardless of citizenship.
The EU has its own problems.
Using 7 1/2 years for some items and 5 for others seems like an attempt to skew figures. From their respective lows, both the DOW and S&P almost doubled before their peaks a year ago. Besides, there really is no direct comparision. The usage of percentages on Country Indexes having only a hundred stocks or less vs hundreds or more is simply not viable. The US has more stocks in some sectors than some countries have public companies.
Life is hard and then you die.
Anyone for a carbon credit collar or a collateral carbon debt instrument.?
Total Returns %, 2003, 2004, 2005, 2006, 2007, YTD
Stock, 205.8, -1.4, 60.9 ,79.1, 29.2, -43.0
+/- Industry, 171.3, -21.5, 36.0, 58.6, 2.2, -11.0
+/- S&P 500, 179.4, -10.4, 57.9, 65.4, 25.7, -17.8
They are down over 60% from their 52-week and 5-year highs. Global recession, mild correction, major correction, upcoming depression--whatever your viewpoint is, China isn't going to stop growing. It may slow somewhat, but it will not stop. McKinsey's findings:
"By 2025, an additional 5 million buildings — including up to 50,000 skyscrapers, or the equivalent of 10 New York Cities — could be built in China, the McKinsey Global Institute, a U.S. consulting firm, predicted in a March report.
China could end up with as many as 221 cities that each have a population above 1 million, as a result of hundreds of millions of farmers moving to urban areas."
Add to this fact that a few hundred new vehicles (300M+) will be added to Chinese roads by 2015--this growth story may slow, but it WILL NOT stop. We are looking at the world's new super power jockeying for position.
Disclosure: I'm long platinum (ELR.TO, the commodity itself, and a few ETF's; catalytic converters will still be in heavy demand going forward), I'm long Petrochina for the reasons stated above, and I'm long steel and infrastructure (MT is strategically positioned to service China's growing demand).
In my view, this global market meltdown--though seemingly severe right now--will look like a hiccup when viewed in context in five years from now.
The world is not ending. We are just about to commence the biggest bull market in the history of civilization.
Bottoms are violent.