It could be the biggest oil stock-buying opportunity of the new century. Bigger than the tech rush of the 90s. Bigger even than Google's super-hyped IPO. (But much more profitable).
I'm not trying to hurry you. You won't miss out entirely if you wait. As I see it, this boom could extend into 2010. Our fortunes can be made every step of the way.
But to stake the ground floor in the coming oil run-up -- and chalk up at least 50% gains in 2009 -- we need to act right now.
First-quarter reports are out in less than 14 days. And after that, I expect my four favorite oil picks to soar to the north -- to the tune of 50% gains in less than seven months -- 210 days -- and that's a conservative estimate.
It's a stock-picker's moment if ever there were one.And I do not foresee the same huge upswing in all market sectors
No, this time the super-winner oil stocks will number no more than a scant handful. Here are my best picks for this year's oil run-up that should hand you at least 50% gains in the next 210 days --
1) A giant oil producer with a near monopoly on “tar sand” oil in western Canada. This stock ought to double by year's end.
2) A manufacturer of drill rigs with customers lined up ad infinitum. I foresee this stock doubling by year's end, too.
3) A maker of cutting-edge high-tech equipmen t required to extract the oil treasure that lies buried four miles beneath the ocean's surface. There's every sign this stock also will double by year's end.
4) A company beautifully positioned to help revive Iraq as an oil power and doubling in price by year's end.
Pick the right needles out of this haystack and your portfolio doubles its worth. It's as simple as that.
These are the sectors -- and the companies leading the charge -- that offer us a near-foolproof path to growth and wealth.
Own these companies now -- before crude hits $70
I won't tease you by concealing where I expect the gains to be made. The gains I foresee -- the places where I'm putting my own money -- are centered around –
>>> Crude oil price increases, resulting in ...
>>> Skyrocketing demand for oilfield services and also ...
>>> An explosion in the prices of crops, food and chemicals …
Bold predictions, you may think. But I believe I offer you the credentials to make them.
The 2006-2008 oil runup -- my picks made 116.8%,
here's what in store for you now
In the last oil stock run-up, from June 2006 to June 2008, the investments I uncovered for my members delivered returns you'll barely believe (but are fully documented) --
116.8% (yes you read that right!) on growth and aggressive-growth energy investments.
So I think I know what I'm talking about when I say ...
>>> Don't be fooled by current low crude prices . They're a blip. I'll prove it.
>>> And don't be misled by today's energy-stock prices. They're a blessing in disguise for investors with vision. I'll prove that too.
>>> Finally, don't think these are the only opportunities in energy investing. From nuclear through coal through natural gas through wind/solar/biomass .. from extraction through refining/processing through transportation through delivery through energy services ... and even looking farther afield to industries tethered to energy prices such as chemicals, food and fiber ... energy (and its twin, the environment) offer you the best long-term investments on this planet.
A little later, I'll give you some of these longer-term energy plays, and direct your attention to dividend-payers that gladden the hearts of retirement planners everywhere.
But Job #1 is making you wealthier. Right now. So let's get started.
FORECAST #1: $70-$90 Oil Before Year's End
With gasoline back in $2-a-gallon territory, some Americans figure the oil shock has passed and they can get back behind the wheel of their SUVs. Little do they know.
The harbingers of another oil spike are right in front of us. Global crude stockpiles began shrinking in February. There's no glut of gasoline and it's still months before U.S. vacation season kicks off.
Look worldwide for the reasons --
a) Decades of relatively low oil prices left producers without profits to make the huge investments needed to increase production capacity.
b) China is on the biggest oil raid in years to feed its voracious industry.
c) India is looking to add a half million new gas-guzzling cars in less than a year.
Now the chickens are coming home to roost. Oil prices spiked above $150 last year and tight credit worldwide only worsens the situation today. Not to mention that oil wells everywhere were shuttered when crude went south of $70/bl. Bottom line: we lack the added capacity we need ... and we won't have it for years to come.
But that's perfect! For investors like you and me, anyway.
Even during terrible recent months for the S& P, my energy picks actually gained 17%.And stocks that show strength during downturns usually lead the way back up.
Now I'm betting money -- my own money -- that, starting in just days from now, oil prices will begin rising smartly. They'll hit $70-$90 by the end of 2009 and be back into triple digits in 2010. The signs are everywhere ...
Russia , still suffering an investor backlash from battering its smaller neighbor last August, has huge, but mostly inaccessible, reserves in Siberia. With profits from its ongoing oil economy depressed, it simply has neglected this Siberian treasure. The crippled Russian bear was once the world's largest oil producer. But it's oil production could dwindle by a full third in the next few years if investors continue their snub.
BP is exiting the North Sea as once-bountiful reserves play out. Smaller operators still working North Sea wells can't afford the ultra-high-tech tools to squeeze these declining fields for the remaining drops. A worldwide credit crunch isn't helping matters.
Oil tar sands in western Canada contain enough oil to supply the entire world for decades, but it's locked into rock. To get at the good stuff, you have to bust up the shale then heat the stuff with massive amounts of natural gas ... and what you're left with is full of sulfur, costly to refine. Prognosis: Do-able, but with a ton of money.
OPEC can't just switch the spigot on these days. Only three OPEC members -- Saudi Arabia, Kuwait and the Emirates -- have the spare capacity, let alone motivation, to do so. (The “little” OPEC nations -- Venezuela, Iran and Iraq, to mention three particularly bad actors -- can't afford to and don't want to. Officially, OPEC will limit supply ... but we won't be surprised if the weaker members let some oil slip out on the side.)
Gulf of Mexico production is flagging in the face of rising taxes, rising costs -- and skyrocketing insurance due to its status as hurricane alley. Many Gulf drillers are laying off rigs.
And finally, there's China on one of the biggest oil grabs in
modern history --
Revving up factories --
Buying tons of raw materials -- iron ore, coal, grains, as well as oil, oil, oil
Passing its own $600 billion stimulus package --
And moving to become a world energy power in its own right --
Pumping $15 billion into a new Siberia-to-the-Chinese-border pipeline in exchange for a share of the oil ... sending Brazil $10 billion to do the same.
Even posting gun-toting Chinese soldiers to Sudan where they are standing guard right now as workers build a massive new pipeline stretching all the way to the Red Sea. In exchange for this risky venture, Sudanese oil -- perhaps a half million barrels every day -- will sail to China. From now, and for the next 20 years.
Developments in China alone could push up oil prices worldwide. When you add in all the rest, oil prices are almost certain to move toward triple digits.
But triple digits aren't necessary for my predictions to start coming true. All that's required is that crude prices move north of $70 a barrel.
FORECAST #2: Canada Takes Off.
Earlier I mentioned a giant producer working the Athabasca, Peace River and Cold Lake tar sands in the western Canadian province of Alberta . While this company has the region more or less locked up, transmuting tar sands (also known as oil shale or bitumen) into refined products -- gasoline, diesel, home heating oil, jet fuel -- is devilishly difficult.
It's mining, not drilling, and strip mining at that -- earth-moving machines big as houses scraping greasy rock out of a resistant earth, never mind howling winds and numbing cold. The shale is then heated in huge retorts to sweat out the crude, with natural gas providing the flame. What's left is a “sour” high-sulfur crude that takes costly additional refining to sweeten and upgrade.
Not pretty. And not cheap. But ...
... crude oil at $70-$90 per barrel makes it worth doing!
When crude passes $70, watch for this company's stock to take off. It's already the dominant player in Canadian tar sands. And last month it strengthened its dominance many times over by announcing it will become -- via acquisition -- Canada's leading integrated oil company. I rate this firm, now trading around $24, a candidate to double by the end of 2009.
FORECAST #3: Deepsea oil drilling: the fiat of the 21st century
Oil and gas prices languished during the '80s and '90s and so did drilling. As a result, four out of five of the world's “jack-up” rigs -- the ones that plant their feet on the seafloor -- are more than 20 years old. The situation is similar on dry land. The easy oil is long gone; what's left must be sucked out with costly, exotic techniques like horizontal drilling and in-situ fracturing.
Make no mistake -- huge reserves still exist, especially undersea, as in the vast Tupi discovery off the coast of Brazil. But Tupi oil is buried underneath two miles of ocean plus two miles of ocean floor; even in calm seas (and they're mostly not), drilling that deep with a “jack-up” rig is like scooping up a beach with a toy shovel.
What's needed is the longest of drills hooked to the most powerful of motors, anchored on submarine-like “submersible” rigs that dip beneath the sea surface when storms blow up.
What's needed, in other words, is undreamt-of technologies so advanced they're engineering frontiers -- rigs that reach four miles below the ocean surface, drill bits that chew through flint, seamless drill pipes that withstand unthinkable torque. I know a company that has it all -- the rigs, the bits, the piping and much more . But perhaps the best thing this company has is ..
Customers lined up to the tune of $11.1 billion worth of unfilled orders that will keep it busy through all of 2009, regardless of drilling activity or oil price fluctuations. With a cushion like this and a stock price currently around $32, this company is an odds-on bet to double by year end.
Those submersible rigs? I know a company in Norway that owns 13 of them. They're busy constantly, contracted to developers around the world on contracts executed at higher day-rates than those of many competitors. This firm has customers around the block too -- $600+ million worth, more than enough to cover the year's revenues even if it doesn't book one more order in 2009.
The stock is still cheap, though, currently trading below $11. When oil prices rise past $70 or so, this relatively small company will offer close to a pure play on deepwater drilling. Be prepared for this company's stock to double at least in the next eight months.
FORECAST #4: From the oilfields of Chincontepec to Iraq -- a new giant's bet pays off
Down Mexico waymay not be the greatest place to drill for oil recently. A lot of what's there has been extracted already and now insurance costs are rising, too, thanks to the region's status as hurricane alley.
I follow a company that's trading around $13 -- way undervalued, in my view. Why?Partly because it's thought to have underbid for a massive job in the Chicontepec field.
What many investors don't know, however, is the importance of Chicontepec to Pemex, Mexico's giant state oil company. This outfit has whip-smart management and has said all along it expects to make big money in Chicontepec. I believe them. Watch for results as early as April 20, the date of this company's next quarterly report.
That's not the only reason I pay close attention to this stellar company. It has plum contracts to perform work in Iraq's Rumaila North and Zubair oilfields. Iraq development will be massive in coming years. This company is in position to be the fastest-growing major oil servicer over the next two years and to double by Dec. 31st.
We've done the work for you
You'll find each of these picks profiled at length in The Energy Strategist, the news service I edit as principal of The Energy Society, and the chief benefit when you join.
While my focus in this letter has been aggressive, The Energy Strategist includes plenty of advice and counsel for the cautious and the conservative.
Stock-picking is what we do. Whether your style is aggressive, conservative or somewhere in between, The Energy Strategist makes it easy to know where you stand, with selections grouped from most aggressive to least --
“Gushers” Portfolio -- The hottest of the hot. Currently I'm following 8 specific “Gusher” positions plus three “baskets” of “Gusher” securities in alternative fuels, biofuels and uranium mining.
“Wildcatters” Portfolio -- “Wildcatters” portfolio selections are growth plays but most also pay a generous dividend. Currently there are 14 positions in the
“Wildcatters” portfolio and all but one pay a dividend.
“Proven Reserves” Portfolio -- This is the “gold chip” portfolio for the more cautious investor -- currently 11 companies that pay dividends up to a mind-blowing 16.9%! “Proven Reserves” investors sleep well at night; the volatility in this portfolio is low, so is the turnover.
A company has to satisfy my standards before it makes the cut in my portfolios. I pore over mind-numbing SEC reports (so you don't have to) .. sift through company financials, poking holes in the numbers ... often call and e-mail company insiders ... even make on-site visits when warranted. I signal when to buy them, when to holdand -- unlike many other advisory services -- when to dump them, too.
Buy-and-hold is a wonderful notion; we all used to believe in it. Like we believed in the tooth fairy, too.
The portfolio holdings are not the only companies I follow. I have a warm-up roster, too. And this roster, currently including 100 companies, is my “How They Rate” list.
From large to small, domestic to foreign, “brown” to “green,” these firms occupy every nook and cranny of the energy universe. Each one is ranked “buy,” “sell” or “hold.” And each is a candidate for promotion to “Gushers,” “Wildcatters” or “Proven Reserves” status -- when it clears the bar.
I've focused on white-hot, oil-price-related opportunities in this letter, but energy is a far broader topic than mere oil and gas. To me, “energy” encompasses everything from the obvious -- oil, gas, coal, nuclear, “green” power -- to the not-so-obvious, such as the agriculture and chemical giants.
Environmental investing counts too, since governments worldwide do not want our energy consumption to befoul our global nest. Looking at the longer term, The Energy Strategist identifies go-get-them opportunities in --
Gas Extraction and Liquefied Natural Gas (LNG) . The market for oil is global but markets for natural gas are local. Think back a few months to when Russia had Europe on its knees, begging not to be left to freeze in the dark. Gas prices shot into the stratosphere in Europe where Putin & Co. supplies nearly every cubic foot .. but at the same time gas was going for a paltry $4 in the U.S.
Domestically, we're sitting on more natural gas than any other nation on earth. With reserves that'll last 300 years -- and there are cost-effective ways to extract them from huge shale deposits in Texas, Appalachia and elsewhere.
One company leading the way also is a leader in our safe-and-sane “Proven Reserves” portfolio -- and pays a mind-blowing dividend to boot, currently 16.9%! Another “Proven Reserves” company operates LNG-hauling tankers across the oceans of the world and pays a nearly-as-breathtaking dividend of 12.4%!
Old King Coal. The cheapest, most readily available fossil fuel, coal also is under heavy attack from environmentalists and others. That makes it a dicey proposition for many investors right now, but adventurous souls still score big paydays trading covered calls in the largest independent coal producer in America, an entry in our “Gushers” portfolio. Not familiar with covered calls? Join The Energy Society and let us teach you how it's done .. as well as pitfalls to avoid.
Nuclear energy and uranium. . Our “Wildcatters” portfolio includes a leading nuclear energy producer whose stock should more than double by year-end. And while the uranium-mining business currently is quiet (at least stateside), our “Gushers” portfolio identifies seven quality mining companies as “buys” for bold investors.
Pipelines and transportation. If you're looking for big dividends plus stable long-term growth, you can hardly do better than pipeline and tanker companies. Oil and gas prices may bounce around but these stocks tend to stay put, plus pay dividends often in the double digits. Our “Proven Reserves” portfolio currently includes a pipeline company with a handsome 9.9% yield and the aforementioned tanker operator with the pinch-me-I'm-dreaming 12.4% payout.
Solar, wind, geothermal and more. Not for the faint of heart, alternative energy has been slammed in the current market downdraft. But as we empty the ground of oil, gas and coal, it's inevitable we'll turn to alternative energy sources. Now is the time to start collecting your alternative-energy investment ideas, and our “Gushers” portfolio is the place to begin. You'll discover 10 alternative-fuel plays plus 10 biofuels plays (some the same company). More than half these companies are rated “buys” right now.
Food and fiber. Rising oil prices likely will goose the stock of an ag giant I follow which dominates ethanol and biofuel processing worldwide.
Chemicals . The same forces ought to brighten the fortunes of the chemical-manufacturing behemoth whose ironclad patents act as a stranglehold on food-and-fiber growers the world over.
Meeting All Your Needs ... And Then Some
The “Gushers,” “Wildcatters” and “Proven Reserves” portfolios are only the beginning. When you join The Energy Society, you get the kind of personal attention and hand-holding you'd expect from a private investment counselor -- at a fraction of the cost.
You'll be issued a secret password and directed to an eyes-only website where you'll discover a 24/7 service that includes --
•In-Depth Analysis. Every two weeks I post a newsletter identifying and analyzing the hottest energy investment opportunities and trends. Don't expect seat-of-the-pants sound bites please: Replete with graphs and charts, this is thoughtful stuff for mindful investors.
•News flashes. When something can't wait, I junk the biweekly schedule and issue a flash report. That way you never miss out on new opportunities.
•Instant E-Mails. But situations arise that are more urgent still, demanding you drop everything and act. In those situations, I short-circuit the website entirely in favor of a personal e-mail straight to your in-box.
•Special Reports. These “white papers” help make you a smarter investor, with advice and instruction on essentials such as taxes and interpreting company reports. Whenever you need such information, they're just a click away.
•Webcasts. Every few weeks I tape a video discussion on a timely energy topic. It's a quick way to convey essential information to you. More personal too -- almost like a one-on-one chat.
•Unlimited website access. Wondering what happened to stocks the last time oil prices spiked? Curious to know how pipeline dividends hold up when the economy turns down? Our archive is an investor's Library of Congress, with access to every story ever published since inception Oct. 26, 2005. Just type in your secret password and you're good to go.
•F*r*e*e stuff. I write two weekly “e-zines”: The Energy Letter for energy investors and Pay Me Weekly for income investors. You'll receive both automatically when you subscribe to The Energy Strategist. Now I admit, you could sign up for these e-zines without paying and they'd be well worth your time to read. For guidance on specific investments, however, you must become a member of The Energy Society.
Finally, there's me. Sure, to my colleagues I'm an energy investment expert, but friends say I'm a regular guy just the same. I speak often at investment events, where you can buttonhole me any time, plus I love contact with members. I'll answer any e-mail you send -- right away if it's urgent, within a day or two otherwise. And when only a personal chat will do, you'll have the phone number that rings on my desk.
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Will YOU Catch The Wave?
Oil prices are headed up and certain stocks will head up with them -- inevitably. It could be years ... decades ... before you got another crack at such a BOOM. Will you discover which stocks to buy? Will you make the no-risk commitment and start benefiting from membership in The Energy Society today? It's your choice of course. I hope you choose well.