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apchempete (< 20)

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The Worst is Yet to Come!

June 17, 2008 – Comments (0) | RELATED TICKERS: ESLRQ , INGR , CDE

Let's face it, the economy is a mess. The engine that is the US economy is driven by consumer purchasing and greased by oil lubricant as we are the most energy dependent of nations. With strong leadership, these factors could pose outstanding opportunity for growth. Unfortunately, the myopic and greedy oilmen who have spent the nation's political capital and driven the economy to the brink have neither the forsight nor the motivation to yake the proper steps to avoid disaster. The fact is that the world's oil production peaked 7 years ago and has been steadily declining ever since. All the while, demand has risen dramatically. This demand/supply scenario bodes well for continued profits for both big oil and alternative energy companies going forward. Meantime, precious metals will remain in favor as an inflationary hedge. Pullbacks in all three sectors should be seen as buying opportunities. My three favorites are ESLR in the solar sector, Murphy Oil for oil and CDE in the precious metals. Meantime, recession is guaranteed. The consumer has been sapped by deflated home values brought about by speculation and predatory lending practices. As oil skyrockets and the average consumer has less to spend, US companies will feel a significant impact indomestic profit margins due to decreased consumer spending as well as higher manufacturing and shipping costs. To reduce the latter, rail transport will continue to benefit (CSX). Avoid home-builders as mortgage defaults will free up bargain values on pre-existing units thereby further pressuring the homebuilders, some of whom will declare bankruptcy next year. (KBH should be a buy around $7/share in a year or two.) As soon as an emergent fuel company willing to take a chance on hydrogen distribution steps up to the plate, BUY, BUY, BUY. If one of the big three would make a push for fuel cell vehicles, it's stock would gain significant favor. I believe GE will outperform as nuclear energy comes back in to vogue. Clean coal should benefit ICO. Food producers wise enough to hedge (CPO) will continue to do well. Even in recession, people gotta eat. Meantime, unload any shares in the entertainment and hotel industry! It's going to get uglier.  [more]

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