10 Stocks to Watch Week of May 12
Regarding those increasingly volatile Chinese stocks, there’s a bearish overlay on Chinese material producers because of government controls on prices. Therefore, refiners and marketers like Sinopec (SHI) are operating at forced losses to prevent major inflation spikes at the pumps. The same discount is weighing down a “producer”, which also happens to be integrated as an exploration company with massive overseas producing properties. CNOOC (CEO) is a massive producer that is not restrained by government price caps, but as is sometimes the case with the market, it has not quite yet seen this dimension to the equation. So CNOOC is poised for a huge upside breakout in prices.
Shipping stocks have entered a confirmed period of expanding margins due to a rapid tightening in available tanker capacity to get that ever more scarce crude to European and US markets. Excel Maritime (EXM), Ocean Freight (OCNF), Nordic American (NAT) and a few others are still attractively priced even though they’ve bounced more than 50% from their lows in February/March. These companies already pay a high yield and are structured so that those dividends expand as cash flow increases. Great medium term plays here.
If you’re long a basket of energy stocks and need some offsetting short exposure, stay with the refiners as their input costs are going to continue increasing. Speaking of energy, Ivanhoe (IVAN) looks ready for another surge to the upside, so long-term accumulation of this stock would suggest topping positions off here in the low $2 range.
ReneSola (SOL) is going parabolic. If you don’t know what that means, never mind.
Sunpower (SPWR) would be more reflective of current market fundamentals if it were trading closer to $110, at least with Oil above $120 and sustaining.
The pipeline of Nuclear Power Plants in development is so large, and this is such a long-long term play that one must have a long-term position in Uranium fuel production and sales. My favorite is USEC (USU). Google can provide you the background and additional color on Reuters. Sorry but why repeat what’s already been written? Besides, do you really care why I like what I like? Most of you seem to only be concerned about the “what” and in terms of the “why”, you’re more concerned with your golf handicap. Most important point is this, directly from USEC’s website: “The AC100 series will be the first centrifuges used to produce enriched uranium for sale when commercial operations begin, scheduled for late 2009”. Remember, long-term, as in let your heirs inherit a huge position you built up in 2008 for their benefit in 2088.
Let’s not forget the short side, for a well-balanced book would not be complete without this side of the equation.
More to come soon…
