The sun rises in the east and sets in the west and refiner margins rise in the spring ahead of summer driving season.
It’s that time of year again – when we dust off our chart books and search for upcoming seasonal plays likely to provide profits to your portfolio.
Investing, Long Term Investment, stock market | admin February 16, 2010 | 
Comments (0)
Michael Fitzsimmons submits:
The U.S. uses a lot of oil. With only 5% of the world’s population, the U.S. consumes 25% of total worldwide oil production. In 2009, America sent $265 billion overseas for oil. In 2008 oil nearly hit $150/barrel and gasoline was over $4.50/gallon in many parts of the country. The U.S. foreign oil bill in 2008 was a gargantuan $465 billion. America obviously has an oil crisis. Combined with fiscal and monetary mismanagement by the Federal Reserve and a dysfunctional Congress, the oil crisis has led to a severe economic crisis, a jobs crisis, and a country that has saddled future generations of Americans with a horrendous debt load.
One doesn’t need an economist or a Federal Reserve study to know what to do. Simple logic would dictate that America must reduce foreign oil imports and adopt a strategic long-term comprehensive energy policy.
Hannah Hsu submits:
Conversations about new global growth engines inevitably focus on Asia, with China dominating most such discussions. But there’s another compelling story playing out in the East. Though its top-line growth still pales in comparison to its neighbor’s rate of expansion, India is rebounding from the global downturn at least as well as the Middle Kingdom.
Like all major nations, India reacted swiftly to the recession, cutting interest rates, offering tax breaks and increasing fiscal spending. But new fiscal measures amounted to just 3 percent of GDP, compared to China’s 6 percent. And conservative lending practices have long defined the country’s banking system.
Saj Karsan submits:
Linktone (LTON) is a Ben Graham net-net, with current assets of $125 million, total liabilities of just $11 million, and a market cap of $70 million. Most of the current assets are in the form of cash, which is the result of a share offering at a significantly higher price. The stock price has shown itself to be quite volatile, which is a good thing for value investors (and keeps other investors away).
The company’s market cap has ranged from $45 million last year to over $100 million a few short months ago. While it is not losing money hand-over-fist as many other net-nets are, there are some risks of which investors should be aware.
Trader Mark submits:
I’ve had VanceInfo Technologies (VIT) in my pool of "up and coming companies to keep an eye on" for about 4 months now; last week Investors Business Daily did their (as usual) excellent summary of a company, so this would seem a good time to introduce the stock to the website. This is quite an interesting concept, as its a similar niche to the Indian outsourcing companies that broke onto the scene the past decade – led by powerhouses such as Infosys Technologies (INFY). While comparing the 2 companies is a huge stretch (INFY $5B in annual revenue, VIT $150M), anyone who invested in INFY in 1999 when it was (split adjusted) $5-$6 has made a pretty penny since. From an economics perspective, I will be interested to see if the Indian outsourcers face the same sort of global wage / cost arbitrage in the next 10 years, that we are seeing in the US, as the Chinese undercut them on price / labor.
Technically, the stock is not in a place to be buying, so for now it remains on the ‘watch’ list; VanceInfo Technologies reports Friday. With a longer term projected growth rate of 30%, and earnings projected for the year at 51 cents. The price of $17 has accounted for much of that growth; the stock is quite rich up here. But it was even richer just a month ago north of $21.
Tom Armistead submits:
Perceptron (PRCP), at Friday’s closing price of 3.70, offers a good combination of margin of security and increasing visibility. Tangible book is 6.19, while excess current assets amount to 3.61 per share.
An adequate recovery in the company’s business (hammered during the downturn) would put the share price up around 7.50, a doubler from where it lies. It is small – market cap stands at 34 million – but it’s sturdy and does business with major players.
Erick Schonfeld submits:
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Google’s (GOOG) Chrome browser is quickly gaining market share, with one estimate putting it at about 5 percent of total usage, while Microsoft’s (MSFT) Internet Explorer is seeing a drop in overall share. But among TechCrunch readers Chrome is already beating every browser except for Firefox.
Investment Directions submits:
Wednesday, I outlined “12 Steps To Getting Your Investment Mojo Back.“ Then, I discussed finding stocks that meet the characteristics discussed under the “Take action” section, using a “spring and levers” approach. Today, I want to focus on growth.
Once again, we are looking to identify leading, dividend-paying companies. But this time we are interested in finding those that can grow faster than the economy. My examples will be Intel (INTC) and Wal-Mart (WMT).
Avi Morris submits:
Investors looking for a quality company should take a look at Enbridge Inc (ENB), a Canadian energy company with a long and impressive track record of growth. The company has paid a dividend every year since 1953 which has been raised annually since 1995. The dividend of CAN$.50 in 1995 has been increased to an annual rate of CAN$1.70 in 2010 (the current dividend is shown as US$1.59 at Yahoo).
As a Canadian company, their government takes 15% of the dividend from foreign (U.S.) investors. Enbridge projects 10% annual growth for dividends in the coming years. Its business divisions are in liquid (petroleum) pipelines, natural gas and green energy (i.e. wind mills, etc.).
George Fisher submits:
Galleon Energy (GO.TO (Toronto) C$6.50,GLNYF.PK $6.06) is a small cap Canadian natural gas exploration and production company with extensive land assets and two interesting development fields. With 750,000 acres in the Peace River Arch field in western Alberta, GLNYF has the ability to expand its resource base through an aggressive drilling program focused on either natural gas or oil. Galleon, due to its size and capital base, carries a higher financial and execution risk, but could reward investor handsomely. The ability to switch drilling programs from natural gas to oil based on market conditions gives Galleon somewhat unique flexibility for its size.
In my opinion, cash flow, production, and proven reserves are the best matrix to analyze small cap energy companies. The main questions that need to be answered are: Does operating cash flow cover the necessary capital expenditures to continue expanding production and add to reserves? If not, how is the shortfall to be funded – additional debt or secondary offerings of equity that will dilute current shareholders? At what point will cap ex become internally funded? These answers will provide some insight into the potential future of a shareholder’s investment.
Galleon is close to having cap ex funded by operating cash flow, and has the resource base to grow production needed to bridge this gap. Somewhat stronger oil and natural gas price should put the company over the top, along with continued success in Galleon’s drilling program.
