You should be legging into energy and infrastructure
October 15, 2008
– Comments (8) |
RELATED TICKERS: XES
, XOP
, MOO
To quote Demon Doug, oil isn't priced in dollars, dollars are priced in oil. Right now, the deflationary aspect of the currency is killing energy and E&P stocks. That presents a lifetime opportunity.
Energy & Food, unlike virtually every other sector, are the lowest on the human needs pyramid. We must have them before we can have anything else. And although North America is the great breadbasket of the world, as well as huge reserves of natural gas, we have a much smaller percentage of oil reserves.
Because of geopolitical concerns, natural gas no doubt will find itself the fuel of the future. Years from now, you will be looking at these fire sale prices and wish you bought. Ignore the noise, and concentrate on these areas. E&P, Equipment services, refining, the midstream MLP's, and natural gas/Canadian energies.
XES XOP offer great baskets in the first 2 categories. FTO, VLO, TSO (who beat the street and they still sold the stock) SUN make great choices for refiners.. You should be buying on DOWN days only, today offered me an excellent opportunity to buy FTO and TSO. I will increase my shares as the prices fall. A major refinery hasn't been built in the US in 30 years.
As for Natural gas, one day we will wake up and international crisis shall again take center stage. Remember Demon Doug's quote, energy is the worlds currency. YOu should be buying Canadian energy companies, SU, CNQ, BQI as a spec to name a few. I've read that the US gets more of its energy from Canada than eny otehr country. Local and safe. Remember, energy is on sale now because leveraged owners must sell. That's fire sale prices for you.
As for the MLP's, they pay an excellent dividend, and again, they aren't going anywhere. 3 of my favorites thatI have limited orders on are ETE, NSH, & MMP. You get a dividend, and a handsome one at that.
Natural gas stocks? CHK has come way down in price, and though they have some debt, they offer a good risk reqard at 16/share. APA and APC look like quite attractive picks as well.
For a nice spec play, how about WPRT, which has a partnership with Cummins engine and converts engines to run on natural gas? I'll wager with you that 10 years from now there will be nat gas pumps next to gasoline pumps. THey just got a nice contract from India and were up 10% on a 700 down day. Yes, I bought some at 10, and I will buy more at 5.
As for agriculture, there are a host of individual picks, MON, POT, DE etc. I like diversity, so I picked up a little MOO at 25 today. Yes, I bought some at 50. And I will buy more at 20.
Regardless of the economic conditions of today, growing world populations will require food and energy and in increasing levels. The prices offered today offer multi baggers in the next 10 years.
Look at your pot of money, divide into your favorite picks, and buy on the way down, making the smallest number of share purchaes first, so if the price falls, you can buy more shares later. Should the prices rise, you can move to otehr sectors, or accumulate when some basing comes into your stock or sector.
In CAPS, I green thumb on my first buy, but I don't commit all my powder. Although I am down 40% from shorting early, I have moved to 60% cash in the past few weeks, and that allows me to steal stocks that the overlevered hedge funds people had to have.
Leg into these stocks, set your limit prices and walk away and sleep easy. Owning energy is like owning currency.
Give me 5 years, and I wager my energy picks will have provided a handsome return.
Nighty nite.
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