"Our thesis remains that we are in a bull market for energy," says John Bollinger in his Capital Growth Report, who notes that his long term strategy is to acquire energy assets on pullbacks.
He explains, "Though we may be near or at capacity production in oil, new supplies of industrial commodities will continue to come on line. The critical dimension is demand, which is strong and growing."
As a leading technician, he points out, "At its heart, technical analysis is but a way of quantifying supply and demand and here as in many other markets, demand has outstripped supply as is clearly evident on the charts.
In his view, he states, the demand curve for energy has crossed up through the supply curve – supporting a bull market. For investors, he suggests that the assets to buy now to invest in this trend can be any of the many energy ETFs, big international oil companies, exploration and drilling outfits, and natural gas stocks.
In addition, while he admits it is "politically incorrect," he also believes this is the time to invest in coal.
In his view, the rational for coal is "straightforward." He explains, "America has a huge supply of coal, 300 years worth by some estimates, and in a world increasingly demanding energy, that coal is going to be increasingly valuable." As such, he says, referring to its "incorrectness," he states, "That too will pass."
From a technical perspective, he suggests, there are numerous stocks that he says, look great. He notes, "They have long declines leading to big bases that are just now starting to show breakouts."
For specific stock ideas he suggests looking at Massey Energy (NYSE: MEE), Peabody Energy (NYSE: BTU), Westmoreland Coal (NYSE: WLB), Fording Coal Trust (NYSE: FDG), Arch Coal (NYSE: ACI) and James River Coal (NASDAQ: JRCC).
As a speculation, he adds, "For those of you who like the leverage lower priced stocks can bring here is a cheapie, International Coal Group (NYSE: ICO)."
Each day, Steven Halpern's TheStockAdvisors.com features the latest investment ideas and market commentary from the financial newsletter community.
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Reader Comments (Page 1 of 1)
7-16-2007 @ 10:27AM
Michael Schneider said...
It's true that oil prices are high but there is plenty of risk in coal esp. with nat gas prices sinking 32 cents today and both the oil and nat gas markets very well supplied. It seems more like a time to hold off on coal. On the other hand if you are bullish on this, the rails may be a better way to play it because they haul all the commodities including what should be record corn production that has to be moved. Less risk there.
Note too that both Carl Icahn and Warren Buffett have been buying the rails. There may be another good time to buy coal but right now the rails look like better buys- unless of course there is a major oil event like a terrorist attack on oil installations. In the long run though, coal could work pretty well.
See http://www.Barrelomoney.com for analyst comments on the latest oil and nat gas inventories (in Oil Alerts- light blue label, left side) and for items about Warren Buffett and Carl Icahn in the Billionaire Watch section (yellow label, top).
7-20-2007 @ 11:38AM
dan said...
Coal stocks are an interesting pick because it still remains attractive for long-term play. Many factors continue to drive the demand for coal upwards, therefore, increasing coal stock as a whole. I recommend this report i found, it has been very valuable to me so far...
http://www.whiskeyandgunpowder.com/Report/CoalReport.html>
Cheers!