Obama's Energy Strategy Related Stock - Ecotality
President Obama's energy policy speech on Wednesday provides direction for where investors should put their money in for the years to come. In the speech at Georgetown University, the president said US should cut oil import by one-third over the next decade to reduce the impact to the economy by event like the turmoil recently in the Middle East and North Africa. To achieve the goal, President Obama suggested more investment in electric cars, natural gas run trucks, and biofuels refineries.
To the investors this speech points to many stocks that may benefit, one of such stock is ECOtality (ECTY) which builds charging station for electric cars. Many major car makers have already roll out either full electric or hybrid electric cars. In order to support mass roll out of electric cars to align with the president's policy, there needs to be sufficient infrastructure available. Just like gas stations to the cars today, charging stations are crucial for electric cars. Trading at $3.2 per share, ECOtality stock is still near the low for the year and has great potential upside.
Home Depot Inc Is Hiring
According to February issue of Bloomberg BusinessWeek, Home Depot Inc., the nation's largest home improvement store and a component of Dow Jones Industrial Average, is hiring more than 60,000 temporary workers in US and adding permanent employees for the second consecutive years. Not only the company is preparing for the busy March to June season but also the increase in consumer confidence and the lower unemployment lift the company's confidence on the overall economy. Another positive news comes from the household purchase which grew 4.4% in the fourth quarter.
The stock has been doing well so far for the last six months, rising 40% so far and is now traded at $37 per share. The technical chart shows very bullish signal as 50 day moving average is on top of 200 day moving average and KD line is moving up. The company should continue to move higher for the year.
Sector On The Move - Rare Earth Metals
High Oil - Samson Oil & Gas
As Western allies began enforcing No-Fly Zone over Libya over the weekend to save the Rebels from total collapse, analysts are predicting a long civil war between Libya's long time dictator Gaddafi and its rebels at the East side. And since Libya is one of the OPEC member with 9th largest oil reserve of the world, the impact on oil price could last a while. So many oil companies are seeing their stock price surged again, especially small oil company like the Australian based Samson Oil & Gas (SSN).
Although the company is based in Australia, it's oil and gas operations are in US and could benefit from the anticipating increase production of oil reserves in US. It's stock price has already taken advantage of rising oil and up more than 250% since December of last year. Traded at $3.77 per share the stock actually has a relatively low P/E of 6.91. The recently sell-off actually indicates great buying opportunity as KD line is ready to be back to bullish trend again.
Cease Fire in Libya
The major headline that moves the market today is the cease fire action in Libya. Now that one of the biggest worries affecting the oil price is gone we could see major retreat in oil price as well as related companies. Highly speculative small oil stocks that flew high during the surging oil price such as Royale Energy, Lucas Energy, and Blue Dolphin Energy would expect pull back.
Aftermath of the Devastating Earthquake in Japan
The magnitude 9 earthquake last week in Japan not only devastated the world's third largest economy but also caused worries among investors around the world. Since the earthquake, Dow has dropped 300 points and is down 1.86% today while S&P 500 has dropped below 1300 and is down 1.89% today. As most stocks are in red today, one group of stocks that bucking the trend is the solar power companies which saw most of its stocks up today. The major reason that lifts this sector is the nuclear power plant explosion caused by the earthquake which raises concerns among governments relying on such a vulnerable energy generation technology.
Solar stocks that have been doing well today are LDK Solar up 6.56%, Suntech Power up 6.64%, Trina Solar up 7.23%, Yingli Green Energy up 6.04% and Canadian Solar up 6.33%.
High Yield Investment - Dynex Capital
In a volatile market like these two weeks where Dow could go up a 100 points and fall almost 200 points today it is probably a better idea to find a more defensive and less volatile stock to invest. And at the same time, still provide pretty good ROI. Such example are stocks that pay dividend with high yield such as Dynex Capital (NYSE:DX).
At $10.4 per share Dynex Capital current provides quarterly divided of 28 cents per share equivalent to annual yield of 10.38% - a pretty good return compared to most bank CD and even some mutual funds. Even if the stock tanks, keep buying the stock gave more shares for the same price plus a higher yield. As a REIT, the company invests in both residential and commercial loans so as the real estate market stabilizes the company should be able to benefit from it.
State of Speculative Oil Play
After weeks of rising oil price due to the situation in North Africa, OPEC officials have finally talk about possible production increase. As a result oil prices have pull back and helped a wide stock rally today. However for those who invested in speculative small oil companies like Blue Dolphin (BDCO), Royale Energy (ROYL), and Lucas Energy (LEI), it might be better to stay away and see how the situation proceeds. Because as soon as the conflict in Lybia is resolved, it's very likely that the 200% gain from these speculative play could evaporate in a matter of weeks or even days. Even if the civil war in Lybia continues, increase in OPEC production and US tap into oil reserve may also stopped the rally of these stocks.
Speculative Oil Play - Blue Dolphin Energy
Many small oil companies have seen their shares skyrocketed for the past week on triple digit oil price due to instability in North African and Middle East. Some stock like San Diego based Royale Energy (Nasdaq:ROYL) has already gained an amazing 280% to $7.58 per share and is still going up. Another one of these high flying speculative small oil company is Blue Dolphin Energy(Nasdaq:BDCO). Shares of the Houston based oil company were traded at $2.6 per share two weeks ago and are traded at $8.73 per share already at the moment, gaining 235% during the period. The company's oil and gas operations are in the Gulf of Mexico and offshore Indonesia, away from the war zone which is probably why the stock attracts a lot of speculative play as well. This was a $50 per share stock back in 2006 so there is a lot of room to grow if the oil price spike continues. But do be aware any speculative play will mean high volatility.
Ethanol Stocks - Pacific Ethanol
Civil war in Libya intensifies and causes oil price to remain at record high of $100 per barrel. With most sectors down on high oil price the sector that attracts buyers so far are the energy sectors such as the oil drillers. Beside the oil related industries another group of stocks that may get benefit from rising oil price are the ethanol producers.
Pacific Ethanol Inc(Nasdaq: PEIX) owns and operates four ethanol production facilities in California, Oregon and Idaho and produces 200 million gallons of fuel grade ethanol per year. For the past three years the company's revenue has been falling from $703 million in 2008 to $316 million in 2009. And for the first three quarters of 2010 the ethanol producer has just generated $194 million in revenue and will have and will have a tough time to exceed the revenue earned in the previous year. This probably explains why the stock is currently traded at 72 cents per share, about 64% off last March's level at $2 and 98% off 2006's high of $42 per share. Pacific Ethanol's hope is the high gasoline price which could attract investors to look at this hard beaten stock. The chart does indicate support at the 60 cents per share level so there is some room for the stock to go up.
Ethanol Stocks - BioFuel Energy
As oil price surged to record high of $100 per barrel, the most obvious stock pick are the directly related companies such as the oil drillers. Since prices of many oil stocks have already been pushed high by speculators, its probably worth while to look at other companies that may benefit from triple digit oil price. One group of stocks that get benefit from rising oil price are the ethanol producers.
Biofuel Energy Corp. (Nasdaq: BIOF) owns and operates two ethanol facilities in US and produces 230 million gallons of fuel grade ethanol per year. For the past three years since the facilities went into production, the company has generated $179 million in revenue in 2008, $415 million in 2009 and $312 million for the first three quarters of 2010. Since dropped to 52 weeks low of 68 cents per share early February, shares have climbed 40% to 96 cents per share today but is still way below last March's price of $3 per share. Last year hasn't been pleasant for the ethanol producers but with oil price so high do expect more investors turning their attention to this ethanol producer.
Speculative Play - Royale Energy
If you see a stock jumped 70% in a day would you still buy it? If your answer is no, you've just missed the chance to earn 84% in four days. And this is not a penny stock we are talking about. The San Diego based Royale Energy (Nasdaq:ROYL), currently traded at $6.64 per share, was just traded at $2 per share 5 trading session ago. The announcement that one of its natural gas well received regulatory approval for production drew speculative buyers and started an amazing five day ride that tripled the stock's market cap. At this point it's still hard to say when the ride will end. The previous high was $12.31 back in June 2008 and was also an amazing 338% in two months.