All Entries in the "Commodities/Energy" Category

The Future of the Energy Sector comes in the name of the Bloom Box

Just imagine if you could move your house’s energy source into your backyard.  Throw away those unhealthy emissions and simply put in a small little box. The future of the energy sector is here and it comes in the name of Bloom Energy.  Bloom Energy Corporation has come out with a revolutionary device known as the “Bloom Box.”  The idea is to get rid of the power plants and huge power grid the same way the laptop replaced the desktop. Already many Fortune 500 companies such as eBay (EBAY), Google (GOOG), Coca-Cola (KO), and Bank of America (BAC) are using this device.  In fact, Google and eBay have claimed to of saved over $100,000 while using one of the twelve stealth tester boxes. So you might ask what is the Bloom Box? The Bloom Box can provide 100 kilowatts of energy using natural gas or biogas.  The price tag is $700,000 but after federal/state subsidies it costs around $0.09 per kilowatt per hour.  The payback period is around three years for this product.  This technology has been around though Bloom Energy is the first company to take it mainstream.  Their next goal is to make a smaller box for residential use.  Bloom Energy has virtually been in stealth mode for the past seven years not letting anyone in on their new secret new device.  With the release of this revolutionary new energy source however this company should take off.  They’re already getting the backing of many top “A-list” VC firms such as Klein Perkins who’ve already pledged $400 million towards Bloom Energy’s growth.  Kleiner Perkins’ CEO, John Doer, says Bloom Energy could be the next Google.  I say why not?  The U.S. energy sector is a $6 trillion dollar industry much larger than the Internet.  This new innovative “Bloom Box” sounds very similar to the Google’s “Search Bar.”  Don’t want to make any promises, but many believe in a short time Bloom Energy could become a $10 billion+ company. I don’t see why as this “little box” promises the world of opportunities. (Watch the 60 Minutes Clip below to learn more about this revolutionary product)

March to be a Bullish Rally for Energy Sector

To support my article I wrote the other day, Oil Consumption to Rise: Invest in Oil I have some graphs that I came across that will historically help point to why the energy sector is going to thrive within the month of March.  Check out the graphs below:

Looks good for Oil Stocks

Solid projections for Natural Gas

Finally good for Refiners as well

History usually tends to repeat itself and I see no reason why March will not live up to the expectations.  I think the energy stocks will perform well in March so keep invested within this sector.  Leave me a comment on what you think will happen within the energy sector in March.

Oil Consumption to Rise: Invest in Oil

With crude oil climbing back over $80 a barrel in the past several days many investors are speculating where it will head next. I for one have always been a strong promoter of oil stocks and am not going to stop now. Expect crude oil to continue to rise. Why? Well recent OPEC reports stated that energy demand will continue to increase throughout 2010. Global oil consumption could possibly rise to as much as 1.4 millions barrels a day. Crude oil prices will rely heavily on the global economic situation however I am optimistic that we will continue to see improvements within the economy. We have yet to see the surge in oil prices yet I think its coming soon. I believe oil is undervalued and consumption will only continue to rise. I expect demand to greatly increase in BRIC countries around the world. I speculate we will see oil rise in the coming weeks being supported by strong economic data. I think this surge will help lead to higher oil prices throughout 2010. Main point, invest in oil stocks. My favorite are Petrobras (PBR), Noble (NE), and Exxon Mobile (XOM).

Natural Gas Stocks Finally Receiving the Love they Deserve

Natural Gas has received no love from investors, Washington, etc. Well all that’s about to change thanks to the one and only $325+ Billion enterprise, Exxon Mobile. With the acquisition of one of the largest U.S. Natural Gas producers, XTO Energy, finally Natural Gas stocks are getting the love they deserve and as a result we have seen the stock prices shoot up 10%+ this week alone. So for those of you who hated on Natural Gas for the longest time, maybe its time your perceptions will change? Lets first look at what you missed out on.

I first recommended Natural Gas on September 25th. I didn’t just push it, I said I love it. In fact here is the exact quote:

“I know last week I advised buying oil stocks. I still love oil especially for the year of 2010 yet forgo those trades at first to jump on Natural Gas as the gains will be significantly better. As a result here are the main Natural Gas stocks you should look at buying. Chesapeake (CHK), Apache (APA), Andarko (APC), Devon Energy (DVN), XTO Energy (XTO), Rage Resources (RRC), and United States Natural Gas Fund (UNG). Trust me this is a play you don’t want to miss. If you don’t believe me, believe other investors by watching this clip.”

My favorite individual Natural Gas stock has been, EOG Resources, which is up 20% since I wrote my initial research report. Back then I said:

“EOG is a Blue Chip stock that everyone should buy. There is no reason to not like this stock as it is well positioned in a strong, growing sector. EOG is right now trading at $78. I would recommend buying it ASAP. My 12-month price target is $105.”

Currently EOG is trading at roughly around $94, give or take. Nice little profits in 3 months. The thing is I have no doubt that these stocks will not continue to rise and this is why:

I see a huge valuation error in Natural Gas, which leads to a bullish opportunity for this commodity. The collapse of our global economy and the unfolding credit crunch sent natural gas prices spiraling downwards to 10-year lows back in September hitting $2.41/MMBtu. Throughout the year Natural Gas prices have been in the doldrums as it has been almost forgotten all together whereas other commodities, most notably Oil have been skyrocketing. The fact is the fundamentals have been screaming BUY, BUY, BUY yet very few people are listening, until now. I see this acquisition creating a buzz around the commodity leading to a new rush to buy up Natural Gas assets. Look at it this way, Exxon Mobile, the largest oil company in the world and steadily one of the most successful companies year in year out invested over $31 billion to buy XTO along with shouldering the $10 billion in debt XTO had. On a money stand point alone; no one would have improved this kind of investment unless they saw strong long-term benefits. Don’t trust Exxon’s judgment? Then maybe I can help.

Natural Gas: Clean, Quality, Cheap, Domestic, & Abundant

Natural Gas is a clean, quality energy that is cheap and domestic. Natural Gas is the second most abundant fossil fuel in America. It’s estimated that we have upwards of 100 years of Natural Gas usage. Plus if you add Canada into the equation who is the largest holder of Natural Gas then combined we are the Mecca of Natural Gas. With this surplus we could develop it into the energy of America and tell the Middle East to screw off for holding us hostage to oil for so many years. Its only now that people are finally catching on that Natural Gas is the cleanest of the renewable resources. As of right now, natural gas is used to heat homes, cook food, power lights, and fuel the revolutionary new Natural Gas powered vehicles. With the winter season coming up, Natural Gas is a huge play as due to the cold winters people crank up the heating. This is even more important as this is expected to be the coldest winter in the past decade. The next great part about Natural Gas is since it is so cheap its getting huge backing from both the consumer and the government. The government is pushing natural gas as the future energy through tax breaks, stipends, etc. The goal is to make it more centered and help push America off oil and onto Natural Gas. With sustained price levels it has become a strong long-term energy play. The demand side of the equation for Natural Gas is starting to look a lot brighter day-by-day. A weak dollar and a recovering U.S. economy should boost demand from the industrial sector. Natural Gas is far more reliable than other options, solar, wind, etc. Washington’s green initiative will push for cleaner fuel options. The government’s green initiative is also positive for the natural gas, as it is a cleaner fuel option. With increased demands there is no reason to not think that natural gas can maintain a price level of $5 with potential upside around $7-$8.

So how to trade the Natural Gas market?

My favorite natural gas stock is still EOG for numerous amounts of reasons.

1. EOG has a return on capital of 26% well above the peer average

2. EOG is expected to have double digit production growth in 2010

3. EOG is the leader in offshore drilling and has several new plans in play

The list can go on and on. Rarely in life do you get second chances in this case you still have the chance to ride the gains of Natural Gas.

Petrobras (PBR) to Soar in 2010 and Beyond

Oil companies profit numbers have been down year to date though in my opinion that is no reason to be hesitant to invest in oil. I still think oil is heading to $100 and I am upping my 12-month target for Brazilian oil giant, Petrobras (PBR). I originally bought into PBR in January 2009 at around $25 a share. In April I wrote an article on Stocks on Wall Street recommending to buy PBR saying “Overall PBR is a steal of a stock, I loved it at $24 its an insult at $35. This stock will jump and move fast. Expect mid $50s come end of the year.” Even after PBR’s 4% drop on Friday the stock is currently trading at $51.33 so it was time I reevaluated the company and look into whether it still has growth potential. I can see nothing wrong with PBR and believe there growth prospects are stronger than ever and that the stock will continue to soar in 2010 and beyond.

“Oil is Going to $100”

Anyone who reads the website regularly knows that I firmly believe crude oil prices are going back to $100 a barrel. If I am correct with this predication, PBR will be a huge benefactor of the increase. Here are four reasons why:

1. PBR has one of the world’s largest proven oil reserves
2. They are a Top 10 Company in terms of Oil & Gas Production
3. PBR’s reserves are expected to double to around 35 billion barrels in the next 2-3 years. Currently they are at 14 billion.
4. PBR’s daily production targets are expected to raise between 10-20%

What is PBR’s Long-Term Potential?

PBR has been a great investment over the years as they are one of the fastest growing oil companies appreciating over 30% the past five years. I see no reason for this to stop and this is why:

1. PBR plans to invest $174 billion by 2013 to support the largest oil discovery in 30 years, a series of super giant oil and gas fields located in the pre-salt layer of Brazil’s Santo Basin.
2. PBR has both the backing of the Brazilian government who invested over $30 billion and the Chinese private investors who have pledged over $20 billion to PBR’s discovery.
3. Brazils government proposed to make PBR the only operator of all new offshore pre-salt oil fields yet to be exploited.
4. PBR expects oil production to increased from 2.4 million barrels a day to around 5.7 million barrels a day by 2020.
5. PBR has unique advantage to competitors in its technological abilities with pre-salt rocks resulting in the large discoveries.
6. PBR has long-term views and have been expanding renewable energy programs such as solar, biofuel, and energy.
7. Biofuel production is expected to increase 18% by 2013.
8. PBR has secured billions of dollars in loans from China in return for guaranteed long-term supply of oil. China’s energy needs are becoming a necessity as they are rapidly growing over the next several years.

PBR is Fundamentally Sound Top from Bottom

I see PBR’s attractive long-term outlook as a must BUY!!! Building on this they are fundamentally all-round company top from bottom.

1. PBR’s market cap is 95.5 billion showing they are a stable company

2. PBR has a current ratio of 1, which shows liquidity to meet financial needs

3. PBR has a ROE of 17% showing they are both efficient and profitable

4. PBR offers a solid 3.2% yield, which should increase as the company grows

5. U.S. investors should be extra interested as the Brazil currency continues to gain strength on the U.S. dollar. If you have the capabilities within your brokerage account try to buy PBR on the ADR, the Brazilian Stock Exchange and get both the gain on currency and equity.

Don’t Miss Out on PBR

If you believe that oil demand will continue to outnumber supply then you should be sold on why to buy PBR. They have a technological advantage over the rest with their pre-salt drilling, they have the support from the government and private investors, they are expanding, and they are in a growing industry. Don’t miss out on this opportunity second chances rarely come around. I firmly believe that come 12-months from today PBR will be trading at around $80-$85.

Value in Energy and Construction Stocks

Surveying the markets right now I continue to see strong growth and value in energy and construction/engineering stocks, my two favorite sectors. Assuming you think oil continues to go higher, in which I do, and then it bodes well for all theses stocks. Companies to focus on in this case are the driller and construction/manufacturing companies working directly with the projection of oil. Right now the market is choppy with high volatility on a daily basis. That means it’s hard to trade without boding the risk of getting burned. In this case I think the best option is to buy on a dip and hold onto these stocks. Take a long-term view, if you are looking to day-trade then pick high beta stocks. The main energy sectors to look at our natural gas and oil and then look at an array of construction and engineering stocks.

Buy Oil, Long-Term it will Continue to Rise

Ever since July I have recommended oil in all my articles. Since then, it has soared higher I continue to see it going up. People are wondering whether supply will go down. I can see no reason why supply would decrease more than 2-5% at max in the next several years. Ultimately people won’t stop using gas, as there are no other cheap alternatives. People want to help the environment and all but not at the expense of their pocketbook especially now a days. Oil has become more of a currency trade as a bet against the dollar. It’s hard to bet the dollar long with the high risk of inflation this makes oil bullish. Need more reasons to buy oil? Here it is:

1. Oil is undervalued, futures continue to rise proving prosperous times.

2. OPEC expects Global Oil Consumption to increase 500,000 barrels a day in 2010

3. Per day Oil Consumption to spring back to 940,000 barrels a day and maybe even as high as 1.4 million barrels a day if demand rebounds

4. Analysts predict higher oil prices will be fueled by a stronger economy and higher global demand in BRIC countries

5. Energy forecasters have regularly made assumptions throughout the past year as the fast-changing economic landscape altered consumption patterns and will send crude oil price high above $145 a barrel

Why I like Oil as a Long-Term Investment?

I am bullish about the prospective of the industry leading into 2010, as U.S. consumption is expected to rebound somewhat and consumption in emerging markets is supposed to rebound substantially. While most U.S. based Oil Companies expect profit drops of around 65% in 2009, I see it rebounding over 65% in 2010 and higher based upon higher projected pricing due to improved long-term economic outlook and new project start ups that have helped boost the upstream in the gas and oil volume. The main determinant to the oil recovery is the pace of how our economy continues to rebound. The stronger our economy becomes, the stronger the oil markets become. One large effect by the stagnate economy is the how the global credit crunch is making it hard for many companies to expand. I feel that our economy is slowly stabilizing and as a result the oil boom will start to take off in 2010.

What Oil Stocks to Look at?

Bullish Oil Stocks: Chevron (CVX), Noble (NE), Transocean (RIG, Diamond Offshore Drilling (DO), and Apache (APA).

Natural Gas another Bullish Sector

Moving on I think Natural Gas is another Bullish Energy sector. Natural Gas is a clean, quality energy that is cheap and domestic. Natural Gas is the second most abundant fossil fuel in America. It’s estimated that we have upwards of 100 years of Natural Gas usage. Plus if you add Canada into the equation who is the largest holder of Natural Gas then combined we are the Mecca of Natural Gas. With this surplus we could develop it into the energy of America and tell the Middle East to screw off for holding us hostage to oil for so many years. Its only now that people are finally catching on that Natural Gas is the cleanest of the renewable resources. As of right now, natural gas is used to heat homes, cook food, power lights, and fuel the revolutionary new Natural Gas powered vehicles. With the winter season coming up, Natural Gas is a huge play as due to the cold winters people crank up the heating. This is even more important as this is expected to be the coldest winter in the past decade. The next great part about Natural Gas is since it is so cheap its getting huge backing from both the consumer and the government. The government is pushing natural gas as the future energy through tax breaks, stipends, etc. The goal is to make it more centered and help push America off oil and onto Natural Gas. With sustained price levels it has become a strong long-term energy play. A couple weeks ago I advised buying the following natural gas stocks and since then many are up 10%+. I still think they have great long-term value so here’s some stocks to loom at: Chesapeake (CHK), Andarko (APC), Devon Energy (DVN), XTO Energy (XTO), Rage Resources (RRC), and United States Natural Gas Fund (UNG).

Construction and Engineering Stocks Strong Investments

Finally, the third sector you need to invest in is construction and engineering. Why? In 2010, I foresee the sluggish global economy picking up its pace and an increase in spending on capital projects. In my opinion, China will continue to spend billions on infrastructure to maintain their world dominance. I foresee the Middle East, Africa, and Eastern Europe to pledge billions to the construction of infrastructure projects to energize growth in their developing regions. Finally, I believe Brazil will lead a resurgence in capital spending across the board in Latin America as they prepare for the 2016 Olympics. In 2009, construction equipment orders have kept stable and have continued to increase due to the large amount of global infrastructure demand. I have no reason to believe that this would not continue to increase throughout 2010. To better the situation, I believe that credit conditions should lighten up allowing for a large amount of delayed construction projects to begin operations again. With recent increases in oil and gas prices, I expect us to see a gradual rebound in oil and gas projects as well. I also anticipate the U.S. to increase its capital spending for highways, tunnels and bridges in 2010 aided by Obama’s $787 billion economic stimulus package and federal/local spending.  Going against these predictions are theories that the global markets will continue to struggle. I disagree, for one we have seen great strides recently in the improved economic forecast. As for the sector itself, most major oil companies have already increased capital spending plans as oil is back over $80 a barrel. In the New Year, I expect capital markets to lighten up allowing more lending to take place. Building off this, acquisitions activity should increase as companies have access to lower borrowing rates and attractive multiples. Overall, we are seeing a resurgence in capital projects, which helps the markets across the board as demand for commodities, and resources will increase. Stocks I like are my three favorite Bucyrus (BUCY), Fluor (FLR), and Foster Wheeler (FWLT).

Invest, Invest, Invest in these sectors. I can’t stress more how bullish these will be long-term and that you will regret missing at this opportunity to buy these value stocks at these low levels. A year from now they will all be up 30%+. Stocks I currently own in this sector are: Fluor (FLR), Foster Wheeler (FWLT), Noble (NE), Chevron (CVX), Bucyrus (BUCY), and EOG Resources (EOG).

Fluor (FLR) the World’s Largest Engineering Company a BUY

Fluor (FLR) is one of the world’s largest engineering, procurement and construction companies.

What I Like about FLR

I think FLR is way undervalued is a strong buy opportunity leading into 2010. I project for FLR to have improved revenue growth heading into the New Year with new orders picking up due to favorable market trends. I also foresee FLR benefiting from increased activity overseas. In China alone, there is a $600 billion infrastructure stimulus to improve the facilities across the country. This kind of stimulus adds great value to FLR, as since they are the world’s largest engineering company, they will be able to secure a large portion of those contracts. I also think we will see increased activity in the U.S. With unemployment crisis looming, infrastructure projects can be a quick fix. It is calculated that every billion spent on constructing highways, etc creates over 28,000 jobs. This sounds like a number Obama will like to hear making him more likely to pledge more stimulus dollars. Moving on I expect demand to increase in 2010 backed by more oil and gas projects, government spending worldwide on construction projects. We saw construction spending increase 27% in September alone. Anyone who still has caution about the growth prospects, FLR has over $31 billion in future project backlogs adding value if the economic crisis were to continue longer than expected. Adding more value FLR has a strong balance sheet with a solid ROA, strong profit margins, and little debt. With effective costs cuts to be implemented in the New Year these numbers should only continue to improve. Adding to this I think PE ratios and earnings estimates will improve in the New Year. In 2009, earnings dropped due to the large amount of cancellations as a result of the credit crunch. With banks getting healthy and more willing to lend we can expect for infrastructure projects to start up again.

Why Construction and Engineering will be a Bullish Sector?

In 2010, I foresee the sluggish global economy picking up its pace and an increase in spending on capital projects. In my opinion, China will continue to spend billions on infrastructure to maintain their world dominance. I foresee the Middle East, Africa, and Eastern Europe to pledge billions to the construction of infrastructure projects to energize growth in their developing regions. Finally, I believe Brazil will lead resurgence in capital spending across the board in Latin America as they prepare for the 2016 Olympics. In 2009, construction equipment orders have kept stable and have continued to increase due to the large amount of global infrastructure demand. I have no reason to believe that this would not continue to increase throughout 2010. To better the situation, I believe that credit conditions should lighten up allowing for a large amount of delayed construction projects to begin operations again. With recent increases in oil and gas prices, I expect us to see a gradual rebound in oil and gas projects as well. I also anticipate the U.S. to increase its capital spending for highways, tunnels and bridges in 2010 aided by Obama’s $787 billion economic stimulus package and federal/local spending. Going against these predictions are theories that the global markets will continue to struggle. I disagree, for one we have seen great strides recently in the improved economic forecast. As for the sector itself, most major oil companies have already increased capital spending plans as oil is back over $80 a barrel. In the New Year, I expect capital markets to lighten up allowing more lending to take place. Building off this, acquisitions activity should increase as companies have access to lower borrowing rates and attractive multiples. Overall, we are seeing a resurgence in capital projects, which helps the markets across the board as demand for commodities, and resources will increase.

Overall

I like Fluor (FLR) due to its strong balance sheet, large growth prospects overseas, and extensive contract backlog. I think it will continue to prosper throughout the year and heading into 2010 as economic times improve. With FLR trading at around $44.25 I would recommend buying it all the way up to $48 with a 12-month target price of $65.

Construction & Engineering: A Bullish Rebound in 2010

Assessing the current conditions of the capital markets, I am always searching for the next bullish sector. Heading into 2010, I believe Construction and engineering will be a bullish sector and this is why.

Why Construction and Engineering will be a Bullish Sector?

In 2010, I foresee the sluggish global economy picking up its pace and an increase in spending on capital projects. In my opinion, China will continue to spend billions on infrastructure to maintain their world dominance. I foresee the Middle East, Africa, and Eastern Europe to pledge billions to the construction of infrastructure projects to energize growth in their developing regions. Finally, I believe Brazil will lead a resurgence in capital spending across the board in Latin America as they prepare for the 2016 Olympics. In 2009, construction equipment orders have kept stable and have continued to increase due to the large amount of global infrastructure demand. I have no reason to believe that this would not continue to increase throughout 2010. To better the situation, I believe that credit conditions should lighten up allowing for a large amount of delayed construction projects to begin operations again. With recent increases in oil and gas prices, I expect us to see a gradual rebound in oil and gas projects as well. I also anticipate the U.S. to increase its capital spending for highways, tunnels and bridges in 2010 aided by Obama’s $787 billion economic stimulus package and federal/local spending.  Going against these predictions are theories that the global markets will continue to struggle. I disagree, for one we have seen great strides recently in the improved economic forecast. As for the sector itself, most major oil companies have already increased capital spending plans as oil is back over $80 a barrel. In the New Year, I expect capital markets to lighten up allowing more lending to take place. Building off this, acquisitions activity should increase as companies have access to lower borrowing rates and attractive multiples. Overall, we are seeing a resurgence in capital projects which helps the markets across the board as demand for commodities and resources will increase. As you have read I am bullish on both the energy sector, especially Oil and Natural Gas as well as construction. To read my past articles on Natural Gas and Oil click on the links. Moving on, here’s a list of top construction and engineering stocks to invest in.

What Stocks to Buy

Bucyrus International (BUCY)

Caterpillar (CAT)

Dresser-Rand Group Inc (DRC)

Fluor Corporation (FLR)

Foster Wheeler (FWLT)

Honeywell International (HON)

Jacobs Engineering Group (JEC)

Meritage Homes Corporation (MTH)

The Boeing Company (BA)

USG Corporation (USG)

Oil Surges Higher: Still Good Investment

Expect Crude Oil to continue to rally all the way to the end of 2009. Oil is now trading at around $78 a barrel after the recent surge. So why to I the oil rally will continue?

1. Chevron (CVX)

2.ConocoPhillips (COP)

3. Exxon Mobile (XOM)

4. Noble Corporation (NE)

5. Total SA (TOT)

6. Transocean (RIG)

7. PetroChina (PTR)

8. Petrobras (PBR)

The Future for Aircraft Fuel: Natural Gas

Monday night a Qatar Airways plane landed in London flying all the way from Doha. What was so special? This flight was fueled solely by Natural Gas. This put Qatar airways in the history books, becoming the first operating commercial flight to use natural gas.

So what does this mean?

I think this exposes a whole new potential source of aircraft fuel for the future. For those of you who read this site daily, you know I have been a huge promoter of Natural Gas stocks and this is another good sign that momentum is building up behind the sector. It makes perfect sense for the airline industry. Its cheap, clean, good quality energy. It will lower emissions around airports whilst saving billions annually in fueling costs. It’s just a start but things are turning moving along for this sector. Make sure to buy in. To read more about why Natural Gas is such a Bullish Sector read this article. Adding more these are the top natural gas stocks to own. Chesapeake (CHK), Apache (APA), Andarko (APC), Devon Energy (DVN), XTO Energy (XTO), Rage Resources (RRC), and United States Natural Gas Fund (UNG).

Ivanhoe Mines receives Bullish Upgrade as Deal is almost Finalized

Ivanhoe Mines is now on the verge of finally completely the long waited Oyu Tolgoi Investment Agreement. This deal which is shared with Rio Tinto would greatly boost both companies share price. The CEO for Ivanhoe is very confident that the deal will be great for both parties. Ivanhoe has soared recently by the anticipation of this deal getting finalized. It is up over 200% since February and will continue to rise now that the deal is in place. Personally I would not buy into IVN right now as it has apprecoiated quite a lot yet I would also not sell. I think the Copper Industry is a Bullish Market and this is why.

Copper is a Great Play

Demand for copper is expected to increase by 1% in 2010 after falling 4% in 2009. To add to this the price of Copper is expected to skyrocket in 2010 jumping to $2.90 a pound from $1.80 in 2009. Moving on construction is expected to pick up in 2010 therefore another indicator to increase demand. The U.S. is currently the world’s second largest consumer and economist predict that money pledged to construction will increase more than 1% and a 2.5% increase in homebuilding. China has offset some of the demand by stockpiling commodities throughout 2009 though I don’t see that as much of a long-term concern. Look for demand to outweigh supply greatly within the next year as the output of existing mines wears out and looking forward there are very few new mines under construction. There is also belief that the mining industry will consolidate sending prices higher. Long-term however secular demand will grow for basic metals. The industrialization of China, India, and Africa will lead to great demand along with the increased capital spending in the United States. All these point to great signs for the sector.

What this means for IVN

Adding value to IVN is the fact that once the deal is finalized they will be constructing one of the largest copper mines in the world. Lets just wait to hear the full details of the deal yet if all goes as planned expect Ivanhoe to soar up to $15 a share.

EOG Resources: A Top Natural Gas Play

EOG Resources Inc (EOG) – EOG is one of the largest independent exploration and production companies in the world. They are focused on onshore natural gas operations, primarily in the U.S. and Canada. Substantial portions of its reserves are in long-lived fields with well-established production characteristics.

Fundamentals

EOG is much undervalued compared to its competitors. It’s estimated that EOG will have a return on capital of 26% which is well above the peer average. Moving on, it is expected that EOG will have double digit production growth in 2010. This is critical because around that time prices will begin to soar where as only now we have seen them stabilize. EOG is also planning on spending more in the New Year to lift production. They are focusing on plays such as the Barnett Shale and the Bakken Oil Shale. Both these areas are being talked about a lot due to the abundant amount of resources they possess. The area is currently leased out by all strong players in the industry: DVN, XTO, and EOG. Adding to this, EOG has announced several new offshore energy plays in which they plan to take advantage of.

Production to Increase

For the rest of 2009, Natural Gas production is expected to rise 5% while jumping double digits in 2010. Fundamentally, EOG is a safe and sound bet with strong EPS (8.62) and P/E (9.29) numbers. Their profit margin is 46% which is outstanding along with a ROE of 26% and a ROA of 14%. Adding to this they offer a miniscule dividend of around 1%. The ex-dividend date is coming up on October 14th so I advise to buy this stock before then.

Market Share - EOG is a strong fundamental play as they are one of the largest energy players in the world making them a market share leader.
Industry Growth – Natural Gas and Oil discovery is a Bullish Industry. With production levels for both increasing leading into 2010 this is a sector that will be on the rise. Natural Gas is popular since it is cheap, clean, quality energy that has received huge backing by the government to become the energy of the future. Oil is still a necessity which will continue its success in 2010 as prices soar. Click on the links to read more about Oil’s Future Strength and Natural Gas’s Future Strength.
Regulation – Regulation will be no problem in fact it will help out EOG. The U.S. government plans on helping push Natural Gas out into the center to make it the future energy of the U.S. by offering subsidies, tax breaks, etc.

Technical Factors

Technically EOG recently crossed a huge resistance barrier passing the $80 threshold. I see this as a big gain as now I believe $80 will become a support level and help boost the share prices higher. Looking at the moving averages charts, EOG is currently Bullish. The 50-day moving average is greatly surpassing the 200-day which means this stock is heading higher.

Overall

EOG is a Blue Chip stock that everyone should buy. There is no reason to not like this stock as it is well positioned in a strong, growing sector. EOG is right now trading at $80. I would recommend buying it ASAP. My 12-month price target is $105.

Natural Gas: The Real Energy Bull Market

Natural Gas is the energy of the future of America. Due to this simple reason it is about to become the biggest Bull Market. T. Boone Pickens has been saying it for quite sometime now and finally the rest of the country is coming around to the idea.

Why is Natural Gas so Great?

Natural Gas is a clean, quality energy that is cheap and domestic. Natural Gas is the second most abundant fossil fuel in America. Its estimated that we have upwards of 100 years of Natural Gas usage. Plus if you add Canada into the equation who is the largest holder of Natural Gas then combined we are the Mecca of Natural Gas. With this surplus we could develop it into the energy of America and tell the Middle East to screw off for holding us hostage to oil for so many years. Its only now that people are finally catching on that Natural Gas is the cleanest of the renewable resources. As of right now, natural gas is used to heat homes, cook food, power lights, and fuel the revolutionary new Natural Gas powered vehicles. With the winter season coming up, Natural Gas is a huge play as due to the cold winters people crank up the heating. This is even more important as this is expected to be the coldest winter in the past decade. The next great part about Natural Gas is since it is so cheap its getting huge backing from both the consumer and the government. The government is pushing natural gas as the future energy through tax breaks, stipends, etc. The goal is to make it more centered and help push America off oil and onto Natural Gas. With sustained price levels it has become a strong long-term energy play.

How to Play Natural Gas?

I know last week I advised buying oil stocks. I still love oil especially for the year of 2010 yet forgo those trades at first to jump on Natural Gas as the gains will be significantly better. As a result here are the main Natural Gas stocks you should look at buying. Chesapeake (CHK), Apache (APA), Andarko (APC), Devon Energy (DVN), XTO Energy (XTO), Rage Resources (RRC), and United States Natural Gas Fund (UNG). Trust me this is a play you don’t want to miss. If you don’t believe me, believe other investors by watching this clip.

Drill Baby, Drill: Invest in Oil

Finally today Crude oil creped up after a dismal past week. This coming after a stagnate few weeks where the energy sector, specifically crude oil has done relatively nothing. For those of you not invested in oil, I think it is time and this is why. Despite the most recent falloff oil is very undervalued and oil futures continue to rise proving that we have prosperous times ahead of us. Adding to this OPEC continues to expect global oil consumption to increase a modest 500,000 barrels a day in 2010, after falling the previous two years. Also, Goldman Sachs also predicts similar results saying higher oil prices will be fueled by a stronger economy and higher global demand especially in China, India, the Middle East, and Latin America. World oil demand is just following the same path the current world economy is taking by settling down after struggling through the long hauls

Why I like oil as a long-term investment? Energy forecasters have regularly made assumptions throughout the past year as the fast-changing economic landscape altered consumption patterns and will send crude oil price high above $145 a barrel. This is very optimistic yet I do believe solid gains will come from now and year-end. More prospective good news came last week by the U.S. Energy Information Administration and the International Energy Agency who overlook and analyze oil prices in the global landscape. They expect oil demand to spring back with a resurgence of about 940,000 barrels a day in 2010 and maybe even as high as a 1.4 million barrel-a-day demand rebound. Reading last months OPEC reports, they stated that the worst was over in the oil markets. They are very bullish about the prospective of the industry leading into 2010, as U.S. consumption is expected to rebound somewhat and consumption in emerging markets is supposed to rebound substantially. While most U.S. based Oil Companies expect profit drops of around 65% in 2009, I see it rebounding over 65% in 2010 and higher based upon higher projected pricing due to improved long-term economic outlook and new project start ups that have helped boost the upstream in the gas and oil volume. The main determinant to the oil recovery is the pace of how our economy continues to rebound. The stronger our economy becomes, the stronger the oil markets become. One large effect by the stagnate economy is the how the global credit crunch is making it hard for many companies to expand. One other concern many people have is the growing concerns in whether Iran’s unrest will cause a superficial spike in oil. This is not a worry at all as Iran needs the oil revenue in order to allow its economy to survive, for more reassurances, read my recent article Will Iran’s turmoil bring higher oil prices?

Moving on, many of you are wondering where to invest within oil stocks? Strong oil play are Chevron (CVX) which will continue to grow due to its acquisition in 2005 of Unocal and its advanced development of successful worldwide projects. ConocoPhillips (COP) who is holding a strong array of oil positions boosting its market-share, Exxon Mobile (XOM) who continues to dominate the sector by its shear size, Noble Corporation (NE) who’s revenue stream is safe and strong due to its large amount of contract backlogs, Total SA (TOT) who’s strong portfolio bodes well for the future and Transocean (RIG) who is a solid deep-water oil play. I also remain bullish on global oil corporations like China’s Petrochina (PTR) and Brazil’s Petrobras (PBR). Both are plays on oil’s long-term secular growth and two of the world’s three most dynamic markets, India being the other emerging global dynamo.

Sell Half of USG: It Might Have Peaked

For those of you who own USG Corporation and bought it when I advised must be loving the gains especially after yesterdays jump. The stock surged 28% yesterday and has now gone up 65% in a little under two months. USG is now trading at $19.64 which is above my 12-month target of  $19 per share. I still think the stock has room to grow based on the increased 2010 expectations. Also, USG has seen an increase in home improvements in 2009 with more to come in 2010 raising the earnings expectations of the company.  Adding to this I like USG’s aggressive cost cuts and as a result I expect an upturn in sales leading to profitability in 2010. My original buy recommendation for USG where based upon attractive valuations, long-term prospectives within the sector, little debt, and due to USG’s below market P/E they have a very attractive upside potential. Now however with the recent surge I am pulling out half of my position and taking the profits. The valuations are no longer as favorable and some are wondering whether or not the stock has peaked. Adding to this increased risks on whether or not USG will have enough capital to supply projects adds concerns to the stock. Overall, sell half and ride out the other half.

Commodities: A Wild Ride but Bullish from Here On

Commodities have been riding the roller coaster of the market and have been some of the hardest hit during the times of the recession. Despite this, I believe Metals and Mining to be a Bull Market. What falls under this category? Well all metals such as aluminum, nickel, zinc, iron, ore, coal, and most importantly copper. Why will these go up? Read and find out.

Metals Outlook

In 2010, I foresee Copper sales and earnings to rebound after falling in 2009. This is backed by the forecasts that the price of metals will rise in 2010 due to both the recovery in the global economy and basic supply and demand. With advancements in infrastructure across the globe from the U.S., U.K. and Europe to emerging markets such as China, Brazil, Middle East, India and Africa we are seeing commodity levels stabilizing and overall demand is growing. With capital and financial markets easing we are seeing increased spending and lending for new capital projects. This has been a huge bull market in emerging markets like China, India and Africa. In 2008 and 2009, the lending dropped off freezing up capital markets and stalling all infrastructure projects leading to a fall in demand for commodities, which crashed the overall prices. Though as you can see now these projects are back on and lending has come back especially in China where the lending policies are very liberal. Other indicators will also push up the price of commodities. In 2010, it is expected for GDP growth to increase 1.2% after falling 2.2% in 2009. More cash in hand increases demand therefore making commodities more desired again.

Copper is the Best!!!

My most favorite metal is Copper and demand for copper is expected to increase by 1% in 2010 after falling 4% in 2009. To add to this the price of Copper is expected to skyrocket in 2010 jumping to $2.90 a pound from $1.80 in 2009. This is great news especially if you are invested in copper based stock such as the Mongolian Mining Giants Ivanhoe (IVN). Moving on construction is expected to pick up in 2010 therefore another indicator to increase demand. The U.S. is currently the world’s second largest consumer and economist predict that money pledged to construction will increase more than 1% and a 2.5% increase in homebuilding. China has offset some of the demand by stockpiling commodities throughout 2009 though I don’t see that as much of a long-term concern. Look for demand to outweigh supply greatly within the next year as the output of existing mines wears out and looking forward there are very few new mines under construction. There is also belief that the mining industry will consolidate sending prices higher. Long-term however secular demand will grow for basic metals. The industrialization of China, India, and Africa will lead to great demand along with the increased capital spending in the United States.

How to Play this Bullish Market?

So how to play this market? My favorite play would have to be copper. Out of all the metals I think copper has the most potential as demand and prices increase. Copper prices are supposed to reach an all-time high in 2010 topping the 2007 highs. Three major players within the Copper industry are: RioTinto (RTP), Companhia de Vale (VALE), and Ivanhoe Mines (IVN). Of these three my favorite is Ivanhoe. As I mentioned before mines around the world are becoming depleted therefore increasing demand. Short-term this is good but long-term the need for new mines and metals is more important towards further growth. Well, Ivanhoe is partnered with RioTinto on building the world’s largest Copper Mine in the Oyu Tolgoi of Mongolia. They have been negotiating with the Mongolian government for quite some time now, however if a deal is in place the sky is the limit. This would make them the major player in the world’s market and the main seller to China due to their close proximity. Ivanhoe with an IA agreement is worth $13-$15 a share. Looking back on the sector as a whole however I believe it is a bull market for the next several years to come.

The Sell-Off of Ivanhoe Mines Begins: Move onto the next Ten Bagger

After a run of all runs, its time to sell Ivanhoe Mines (IVN) for good. I have held the stock off and on since February and I finally feel that it may have peaked. After shooting up 25% Thursday the stock is now trading over $11 a share. Back in February when I first got in it was trading at $4.40. That’s a total net gain of 160%, quite a nice ride. Last week, I advised to sell half the position and this week I am saying sell all of it and this is why. One IVN is trading well over its self right now, with a 12-month target of $10.80. To add to this volume has died off in recent time plus shorts have picked up. This stock could quickly turn the tables of the shorts are heavily bought up. After the big surge many analysts have downgraded the stock as well. IVN’s mean recommendation fell from 2.0 to 2.5 last week with 1 being the best and 5 the worst. I still love Copper as a market play but think IVN’s has outperformed the market so much that I don’t think it can continue to hold it up. To add to this the Mongolian government is still structuring the deal in a way that would cripple IVN with high windfall taxes. Personally I continue to foresee a downfall in the market. We have been riding high so much as of recent that a setback is needed. I think September will be a bad month for the stock market, which is another reason I want to sell and be invested in cash. This use to be a great stock to buy but in this market I am no longer comfortable with owning it and am going to sell off my whole position Monday morning. As of right now, IVN is up trading at $11.17 a share. I think I will be able to cash out around $11.30 as a high and $11.05 as a low depending on how the market opens on Monday. You can try and continue to play IVN up to $15 a share yet be able to bear the risk as if the shorts do come down hard it will be trading around $8. Best bet is to sell of this stock and move on and find the next 10-bagger.

Ivanhoe Mines & RioTinto get Deeper into IA Contract: What it means Long-Term

Ivanhoe Mines (IVN) is again in further heated discussion with Mongolian Government on negotiations for the Oyu Tolgoi copper-gold development project. They have been sitting in daylong meeting since July 27^th with the goal of getting it completed. It was only two weeks ago that Mongolian Parliament voted to authorize the Government to conclude the meeting on a long-term Investment agreement with IVN and Rio Tinto on the development of the mine. In a recent letter the government indicated they would work with the companies to reach an agreement that is mutually beneficial. Easily this will be a win-win for both sides if structured right. IVN and RTP get their mines and Mongolian gets economic prosperity. Oyu Tolgoi is one of the world’s biggest undeveloped copper deposits. Recently Ivanhoe has taken a strong stance forcing the government to meet and come to an agreement. Ivanhoe outlined what a new mine could due. The following is exact quotes from Ivanhoe’s letter to the Mongolian Government.

“The coalition government of Mongolia is the first step to ensure great development of Mongolia’s socio-economy in a way of creating thousands of new job places, business opportunities and infrastructure. It also will be a beginning of responsible use of natural and mineral resources”.
The companies reminds that a decision on “putting the Oyu Tolgoi into economic circulation will be a vital for future and next generation of Mongolia decision”. The content of the letter means that some MPs do know nothing about mining and investment contracts. “So all of you are allowed to ask us questions on the issue,” it says. 
In accordance with the law on parliament, MPs are not responsible for a speech given at the parliamentary session. It is also possible that some policy-makers compulsorily inhibited the Oyu Tolgoi project. Nonetheless, it is more than strange for a foreign company to give a conclusion to independent activities of the legislature body of a sovereign country. 
If the “Ivanhoe Mines” company really wants to give the MPs useful research documents and information about its activities, why did it send the letter to each parliamentarian in personal line? They could have sent a letter to the Speaker or secretary of the parliamentary office. It is suspicious that these companies sent the letters only after approval of the 57th resolution on granting the government a right to establish a contract with the investors, but not in previous year when parliament was considering the issue. Some people consider that under expressing personal interests and attempting to influence MPs lies a wish to bribe them. According to the letter signed by S.Riggall, a commercial manager of “Rio Tinto”, and by J.Foniani, a legal affairs manager of “Ivanhoe Mines”, Mongolia has two ways: either to attract foreign investments, build world standard mining sector and create strong independent economy, or to build depending on neighbors economy, get limited agriculture, and make investors lose a confidence in in Mongolia. “Your respected votes will choose the right way and will benefit in the long run. Hopefully we will get chance to share our opinions,” the letter said. Mongolia’s economy is limited, the import dependence on China has reached some 80 percent, Mongolia is a landlocked country. But, of course, Mongolians do not think that the 76 parliamentarians know nothing about how to develop the country and who to partner with. Although the country suffering from financial crisis and other problems and Mongolians need money, Mongolia still has an immunity to protest itself from any country’s interference. Anyway, the government has a right”

What it Means

After reading that article it has become clearer that culturally there may be insurmountable barriers to this agreement. The letter from both RTP/IVN was an insult to the government and their intelligence. They laid out what a mine could do for the country and the great riches it could bring in. They also laid out that if the mine is not build to expect downfall within the Mongolian Economy. If the government is too stupid to see the clear gains to society brought by the mine well maybe then it will take a collapse of the togrog (Mongolian Currency) to change their attitude. Right now the TG is weak and even losing value against the U.S. Dollar. Is there anything besides the mine that can rescue the TG? What is holding them back from making this agreement? Currently Mongolia depends on China for 80% of their imports. Unless they are trying to sell off the deal to a Chinese Company, then there is no logical reason in why it won’t be signed by weeks end. The country is in a mess with no form of middle class. There have the poor and then they have the rich and the politicians who do well. Mongolia has made a mistake waiting this long to capitalize on the copper boom. To hold off on any agreement would be idiotic at the least. What’s holding it up? If they really want to get a mine up and running, they should be able to come up with a solution to the windfall tax issue. As for IVN this stock is solely speculated on whether or not this agreement goes through. Further standstill will only send share prices lower long-term. I have played IVN throughout holding it for five months buying it at $4.40 and selling out at $8.37. Well after the drop I bought back in at $7.31 last week. IVN with an IA agreement by the government would appreciate a lot. I strongly believe, as do many analysts that IVN will easily reach 13-15, in a short run if this can go through smoothly.  The runs have been due to speculation and anticipation on a signing. As you can see most likely an agreement will be in place soon. I firmly believe that by weeks end we should have an agreement in place. For those of you not invested within IVN, hold off until we have further definite news that an agreement is in place. For those of you invested either hold it for the long run or swing trade it at its peak after an agreement goes through.

USG Corporation: Prospects Look Good

USG Corporation (USG) - This producer and distributor of a range of building materials, which are used in construction, repair and remodeling, is North America’s largest maker of gypsum wallboard.

What I Like

USG is currently priced at $12.03 making it very attractive. This company is coming off a 52-week high of $35.00 only last summer and tumbled like the rest of the market due to huge concerns.. It is currently on an uptrend when valued against both the 50-Day Moving Average ($10.77) and 200-Day Moving Average ($9.65).  It has huge room to grow and these are the reasons why. USG is expected to decline in 2009 by 17% due to the downsize in volume however on the contrary in 2010 expectations have numbers increasing substantially driven by increases in capital expenditures. USG has seen an increase in home improvements in 2009 with more to come in 2010 raising the earnings expectations of the company. As a result of USG’s aggressive cost cuts I expect an upturn in sales leading to profitability in 2010. Overall, my buy recommendation for USG is based upon attractive valuations, long-term prospective within the sector, and due to USG’s below market P/E they have a very attractive upside potential. Volume is above 100,000, which is the threshold in which I set. Another plus is the company is not in debt and has half a billion in cash on hand top help expand their worldwide brand. Like we know, Cash is King. This company is the leader in its sector and recently been upgraded by many analysts yet the stock still has huge gains to come.

Sector Outlook

My fundamental outlook for construction and engineering remains Bullish, USG is a leading player within this sector. As the recession is slowly coming to an ending point we are seeing a resurgence in renewed spending, both from the public and private sector, in oil and gas projects as well as major infrastructure projects worldwide. We are also seeing a stabilization among housing prices resulting in many renovations of older houses along with the development of news ones which all bodes well for USG’s business plan. Along with this U.S. Government has pledged billions in stimulus dollars to transform the U.S. infrastructure system. Since FDRs huge infrastructure projects the U.S. has put the upkeep and renewal of infrastructure on a backburner of things to do. Well now Obama is striking back pledging billions on billions to reform the public transportation of America. I expect Long-Term growth in the sector, as companies such as USG should benefit from new infrastructure projects such as new super-highways, high speed rails, etc which appear to be at the beginning of a renewed up cycle. I expect capital spending for highways, tunnels and bridges to be aided in part by state and local government bond issues, and increased federal spending. I see the emerging markets picking up as well with Latin America, Asia, Eastern Europe and the Middle East greatly expanding with large projects with intentions on energizing growth and prosperity. I expect the industry to see basic fluctuations due to the continued uncertainties of the global economy however, valuations for the sector are at historical low levels where long-term prospects are very favorable. I think we think these companies will outperform the market substantially.

Risks

Basic risk against USG are insufficient amount of funds due to tight capital markets making it hard to fund and supply projects result in delays and cancellations, weakened overall housing market, and lack of support by government’s stimulus plan.

Overview

USG Corporation (USG) is about to deliver some big time results due to the fact that the whole sector is greatly undervalued. I project a 12-month target price of $19.

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Time to Move On: I’m Selling Ivanhoe

Guys, it has been a great run but I am cashing out of my much beloved Mongolian Mining Company, Ivanhoe Mines (IVN). For those of you who have followed me since the start, you know that I absolutely have loved everything about this stock. In fact, Ivanhoe was the first research report I ever wrote for Stocks on Wall Street back on February 20^th. At that time, IVN’s share price was at $4.42 and since then it has been all up-hill. I sure hope that throughout the way you bought some shares of IVN as since the research report was published the stock has appreciated 107% in only five short months as the stock hit a high of $9.15 last week. I wrote about it multiple times: Mongolia’s IVN’s Outlook, Pick of the Year: IVN, and Past Research Reports, so don’t say I didn’t give you the opportunity. I am still Bullish Long-Term on Oil and IVN itself yet just think my gains are too good to pass up as a result, I have to pull out. Unfortunately since last week, the stock has dropped $0.75 cents which lowered my overall return however I was able to cash out and sell all my shares yesterday at $8.37 for a total gain of 90% in only five short months. Great gains huh? I am not selling this stock based on weakness but more on the fact that I have some stronger picks lined up that I need cash for and that I foresee IVN’s gains not becoming as substantial in the following months as they were in the past. The overall outlook for Ivanhoe is mixed due to a mixture of good news and bad news.

Good News

So I will give the good news first. Yesterday IVN was able to sell all of their U.S. oil and gas operations to a segment of National Fuel Gas Company for about $40 million. This deal went down, as the proceeds were needed in order to finance IVN’s future projects in Canada and Ecuador. The cash will be used to advance the initial stages of its heavy-oil projects, Tamarack in Western Canada and Pungarayacu in Ecuador. At the time, Ivanhoe’s U.S. assets produced about 645 gross barrels per day of oil in California and Texas. Also the sale will include certain exploration acreage in California. Ivanhoe’s heavy-oil experts based the sale on the fact that they believe the operations in Canada and Ecuador will prove more profitable than an expansion in the U.S.

Bad News

So now to the bad news. Last week, Ivanhoe received a major setback as they were close to winning the final parliamentary go-ahead to build a massive copper and gold mine in Mongolia. Ivanhoe said Mongolia’s parliament passed a resolution that authorizes the government to finalize a “definitive investment agreement” with the Vancouver Company and its partner Rio Tinto to build and operate the Oyu Tolgoi project. Prior to the parliament’s resolution, there had been expectations the Mongolian lawmakers could award the final go-ahead for Oyu Tolgoi, which the company has been trying to achieve for more than five years. Instead of approving any such agreement, the parliament has given the government authority to conclude the agreement. This was not the news Ivanhoe investors were eager to see. If the government had said, “Go Ahead build the mine, we love the agreement” then maybe I would still be an investor. Instead the government has created another long fight between the mines and parliament in which I do not feel like sitting through.

Overall

At the end of the day, yes in a years time IVN’s shares will have most likely appreciated and quite a bit if they can sort out the deal with the government though on the other hand if the government drags this deal out shares could drop and with a current gain of 90% that is too good for me to pass up.

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Foster Wheeler: A Stock You Can’t Miss Out On

Foster Wheeler (FWLT) – Foster Wheeler is a global engineering, construction, and project management contractor and power equipment supplier. In business for more than 100 years, Foster Wheeler is a global engineering, construction and project management contractor and power equipment supplier. The company operates through two business groups, the Global Engineering and Construction (E&C) Group and the Global Power Group.

What I Like

FWLT is currently priced at $19.75 making it very attractive. This company is coming off a 52-week high of $63.18 only last summer and tumbled like the rest of the market due to huge concerns. It has huge room to grow and these are the reasons why. FWLT is expected to decline in 2009 by 15% due to the downsize in volume however on the contrary in 2010 expectations have numbers increasing substantially driven by increases in capital expenditures, increases in customer spending levels as oil prices stabilize which will in turn lead major oil corporations to refocus on long-term projects. Emerging markets will come to form as well with billions of dollars to offer and I see FWLT to target this sector and be a leading operator for the global sector. In February, FWLT signed the largest contract ever with Paradip refinery project in India. The contract included over four million E&C man hours, bringing FWLT’s total to around 16.2 million man hours back logged from the end of the first quarter of 2009.  I expect this and additional contracts to begin to benefit results the E&C company in late 2009 and 2010. FWLT also recently changed its domicile to Switzerland from Bermuda, completing the redomestification of its holding company. The company believes the change of incorporation establishes a corporation that is more centrally located within its area of global operations in a country with a stable and well-developed tax regime. Currently, FWLT generates more than 60% of its bookings outside of Europe and the U.S. With Switzerland being neutral this will lead to many tax benefits. Overall, my buy recommendation for Foster Wheeler is based upon attractive valuations, long-term prospectives within the sector, and due to FWLT’s below market P/E they have a very attractive upside potential. Volume is above 100,000, which is the threshold in which I set. They have outstanding numbers with a 76.98% return on equity and 11.03% return on assets. Another plus is the company is not in debt and has half a billion in cash on hand top help expand their worldwide brand. Like we know, Cash is King. This company is the leader in its sector and recently been upgraded by many analysts yet results have yet to sink in.

Sector Outlook

My fundamental outlook for construction and engineering remains Bullish, FWLT is a leading player within this sector. As the recession is slowly coming to an ending point we are seeing a resurgence in renewed spending, both from the public and private sector, in oil and gas projects as well as major infrastructure projects worldwide. The U.S. Government has pledged billions in stimulus dollars to transform the U.S. infrastructure system. Since FDRs huge infrastructure projects the U.S. has put the upkeep and renewal of infrastructure on a backburner of things to do. Well now Obama is striking back pledging billions on billions to reform the public transportation of America. FWLT’s big growth will come from the oil companies who have reiterated their capital budgets and are ready to spend after seeing the price of crude oil increase the past few months. Plus oil is going nowhere but up, read my current article about Why Oil will Surge. I expect Long-Term growth in the sector, as companies such as Foster Wheeler should benefit from power generation projects, including coal-fired plants, oil & gas, and nuclear energy, which appear to be at the beginning of a renewed up cycle. I expect capital spending for highways, tunnels and bridges to be aided in part by state and local government bond issues, and increased federal spending. I see the emerging markets picking up as well with Latin America, Asia, Eastern Europe and the Middle East greatly expanding with large projects with intentions on energizing growth and prosperity. I expect the industry to see basic fluctuations due to the continued uncertainties of the global economy however, valuations for the sector are at historical low levels where long-term prospects are very favorable. I think we think these companies will outperform the market substantially.

Risks

Basic risk against FWLT are insufficient amount of funds due to tight capital markets making it hard to fund and supply projects result in delays and cancellations, lowered oil and gas prices, and overall weakened global economy.

Overview

Foster Wheeler (FWLT) is about to deliver some big time results due to the fact that the whole sector is greatly undervalued. I project a 12-month target price of $34. I purchased a large sum and I hope you will to after realizing the potential.

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Despite recent Slowdown, I Remain Bullish on Oil

Crude oil fell again yesterday on Wall Street, leading to a stagnate eight weeks for the sector as prices continue to fall. Whether or not you are invested within Oil maybe you should be as recent indicators prove the oil industry to be very bullish now long-term. Despite the drop in oil prices, oil futures continue to rise proving that prosperous times are ahead of us. More prospective news came along yesterday when OPEC reported that they expect global oil consumption to grow a modest 500,000 barrels a day in 2010, after fall the previous two years. Goldman Sachs also predicts similar results saying higher oil prices will be fueled by a stronger economy and higher global demand especially in China, India, the Middle East, and Latin America. In OPEC’s monthly market update, they stated that oil would fall barely to around 1.6 million barrels a day. This results in only a small decline around 83.8 less million barrels a day as the world economy stagnates. Though the good news overall is that these recent projections are less severe than we had projected last month. World oil demand is just following the same path the current world economy is taking by settling down after struggling through the long hauls.

Why I like oil as a long-term investment? Energy forecasters have regularly made assumptions throughout the past year as the fast-changing economic landscape altered consumption patterns and will send crude oil price high above $145 a barrel. This is very optimistic yet I do believe solid gains will come from now and year-end. More prospective good news came last week by the U.S. Energy Information Administration and the International Energy Agency who overlook and analyze oil prices in the global landscape. They expect oil demand to spring back with a resurgence of about 940,000 barrels a day in 2010 and maybe even as high as a 1.4 million barrel-a-day demand rebound. Reading last months OPEC reports, they stated that the worst was over in the oil markets. They are very bullish about the prospective of the industry leading into 2010, as U.S. consumption is expected to rebound somewhat and consumption in emerging markets is supposed to rebound substantially. While most U.S. based Oil Companies expect profit drops of around 65% in 2009, I see it rebounding over 65% in 2010 and higher based upon higher projected pricing due to improved long-term economic outlook and new project start ups that have helped boost the upstream in the gas and oil volume. The main determinant to the oil recovery is the pace of how our economy continues to rebound. The stronger our economy becomes, the stronger the oil markets become. One large effect by the stagnate economy is the how the global credit crunch is making it hard for many companies to expand. One other concern many people have is the growing concerns in whether Iran’s unrest will cause a superficial spike in oil. This is not a worry at all as Iran needs the oil revenue in order to allow its economy to survive, for more reassurances, read my recent article Will Iran’s turmoil bring higher oil prices?

Moving on, many of you are wondering where to invest within oil stocks? Strong oil play are Chevron (CVX) which will continue to grow due to its acquisition in 2005 of Unocal and its advanced development of successful worldwide projects. ConocoPhillips (COP) who is holding a strong array of oil positions boosting its market-share, Exxon Mobile (XOM) who continues to dominate the sector by its shear size, Noble Corporation (NE) who’s revenue stream is safe and strong due to its large amount of contract backlogs, Total SA (TOT) who’s strong portfolio bodes well for the future and Transocean (RIG) who is a solid deep-water oil play. I also remain bullish on global oil corporations like China’s Petrochina (PTR) and Brazil’s Petrobras (PBR).  Both are plays on oil’s long-term secular growth and two of the world’s three most dynamic markets, India being the other emerging global dynamo.

Solar Slowdown: Beware Investing in Solar Stocks

Those of you jumping into hot Solar stocks should hold back now as they are starting to cool down now that the solar power industry is about to deliver some bad, bad news. Yes bad news as today, analysts reported that the leading solar companies might miss expectations when they announce earnings and could very well lower their forecast and expectations for the rest of the year. This makes investing in Solar stocks not as attractive as it once was. Adding to the disappointment for the sector is the rapidly falling prices of the photovoltaic systems. With so much competition among the sector now, prices are being forced lower and amid the recession many companies are finding problems in financing new projects. A huge side affect harming the solar industry is the fact that many buyers are putting off their purchases hoping they can get a better deal down the road. Solar has become a commoditized business in which every company delivers the same product. Ultimately consumers pay per watt for solar power. With the downfalls of the recession and big corporate cuts of technology, analysts predict prices to fall from $2.50 to $2.00 per watt and falling to around $1.85 per watt in 2010. That alone will force many solar companies to lower their forecasts. With many large corporations such as First Solar (FSLR) expected to miss expectations they will most likely have to write off millions in inventories as well this fall as their value depreciates. As a result, I am becoming very bearish at least short-term on all solar stocks such as SunPower (SPWR) whose sales have dropped 50% so far this year and due to falling prices the company will most likely cut back prices from the premium numbers they currently charge. This all will spill down the line leaning towards bad news for Evergreen Solar (ESLR) and Suntech Power (STP). The only bright spot for the Solar sector would be the American Recovery and Reinvestment Act, which Barack Obama signed into a law in February. This bill will include grants for renewable energy projects, mainly solar, and helps reimburse buyers of solar energy up to 30%. The government plans to disburse around $3 billion to the sector. Plus with rising oil costs and crude expected to soar over $100 in the upcoming years, more people might turn to the clean energy. Overall though, my fundamental outlook for the next year for Solar Energy is Neutral yet leaning to the side of negative. Long-term solar will appreciate as the companies are aggressive in pursuing new product introduction and foreign expansion which has been really successful especially in China. In this solar downfall though I think the sector will see an up-haul and re-shift with many of the smaller companies merging with the large corporations in order to survive. Ultimately if you are looking to trade or invest in stocks within the next year, void Solar.