"The co-editors of Vital Resource Investor caution that "no market moves in a straight line, and in commodities, the action is often extremely violent." However, for long-term investors, they offer some favorites in iron ore, aluminum and copper.
"All commodity bull markets are ultimately gored by demand destruction, alternatives and new supply. But it will almost certainly be years before that happens to this one. And that means plenty of money will be made along the way.
"We're still extremely bullish on iron ore as the market remains in deficit and prices continue to rise. Chinese domestic supply has been falling and, if this continues, imports will make up the difference, thereby helping the miners.
"China consumes 51% of the world's iron supply. Portfolio holding Companhia Vale do Rio Doce (NYSE: RIO), the world's largest iron ore producer, will benefit from the shortage in iron ore supply.
"We favor aluminum in the industrial metals sector. We've been advocating aluminum for some time, and the market's finally going our way. Aluminum prices have been impacted by lack of available power in China and South Africa and higher alumina and bauxite prices.
"Some 20,000 or more million-dollar block trades are made each day," says Peter Way in Block Traders ETF Monitor, which assesses the activity of these trades. Here's some current top "big block" bets.
"Since it's these big dollar pressures that move markets, we want to know what they are likely to do next. Our analysis determines what the pros' expectations are for the coming prices of stocks, from the way they protect investments they have or are making.
"Based on our proprietary analysis of this big block activity, we determine the prospects for each ETF sector to determine where prices will be in the next 3 months. We seek the best balance of upside risk and downside exposures.
"We don't want to buy anything that doesn't offer a net payoff of better than 5% over three months, or an annual rate of +22%. International and global ETFs. and emerging markets still hold appeal, with MSCI Brazil iShares (NYSE: EWZ), the best bet.
"The ETFs that have been providing the most reliable and productive gains of late have been in commodities. Without any leverage, there are currently a number that appear attractive, given the volume market-makers' appraisals. The PowerShares DB Agricultural Index ETF (ASE: DBA) outranks just about all of the 2,500 issues we cover. PowerShares DB Commodities Index ETF (ASE: DBC) also offers strong buy credentials."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
The price of crude moved to a record above $112 overnight. It seems that speculation, a weak dollar, and concern about demand just keep pushing oil higher.
Now, oil is part of a "good news/bad news" play. Evidence is coming out of Russia that oil production there has peaked. According to the FT, "Russian oil production has peaked and may never return to current levels." By many measures, Russia is the world's second largest oil producer.
That bad news may be offset by a huge oil discovery off the coast of Brazil. The country's state-owned oil company, Petróleo Brasileiro, said it had made a huge discovery off-shore. According toThe Wall Street Journal, "the head of Brazil's National Petroleum Agency, Haroldo Lima, said the strike could be one of the world's biggest oil discoveries in decades, containing as much as 33 billion barrels in oil equivalent."
The question now is whether one huge deposit can offset a decline in Russia and a fall-off in oil from other large producers like Mexico. For now, the answer is "no." That's because the Brazil discovery is in deep water. It could take several years to get it completely online. The decline in production in other countries is happening now.
The Brazil discovery brings hope, but no relief, at least no for now.
Douglas A. McIntyre is an editor at 247wallst.com.
Validea is a fascinating newsletter that assesses stocks based on the known criteria of "legendary" stock investors, such as Warren Buffett and Peter Lynch.
Here, editor John Reese reviews Telefonica (NYSE: TEF) -- a Spain-based telecom firm with operates in Europe and Latin America -- based on the strategy of quantitative analyst James O'Shaughnessy.
"James O'Shaughnessy has noted that 'disciplined implementation of active strategies is the key to performance.' He should know; his study of 44 years of stock market data is one of the most extensive ever of the market.
"The system he devised based on that research produced average back-tested returns of 22% per year for those 44 years. At times like these, it's more important than ever to heed his advice, and keep your emotions in check by focusing on fundamentals.
"Telefonica (NYSE: TEF), based in Madrid, Telefonica is involved in the communications, information, and entertainment arenas in Europe, Africa, and Latin America. The firm has a presence in more than 20 countries and more than 218 million customers.
"U.S. Global Investors (Nasdaq: GROW) has been growing its revenue and earnings at an accelerated pace over the last few years, notes Horacio Marquez, adding "And that pace is about to pick up after a recent mild respite."
The contributing editor to The Money Map explains, "We expect very strong gains in this stock to come in short order." Here, he looks at the fund management firm.
"The reason is very simple. If you couple some of the best minds in emerging-market investments and commodity investments with a comprehensive quantitative and qualitative approach, you get consistently top-performing funds with eye-popping returns.
"Last year, four of the firm's equity funds, – representing more than 80% of the money under management – were among the top performers in the overall U.S. mutual fund universe, in the one- and 10-year time periods.
"And in the fund-management business, strong, consistent fund performance drives growth in assets under management. And since growth in assets under management drives fees, it is no surprise that this company has been able to achieve operating income growth rates of between 27% to 94% over the last 10 years.
"In fact, the company should see accelerating earnings growth in the second half, as the interest rates cuts favor higher commodity prices and emerging-market investments – areas in which U.S. Global's funds excel.
With news the embattled mortgage lender Northern Rock is being nationalized by the British government, until it can find a buyer, the question arises whether this is a good move or not?
Analysts at Bear Stearns said that the government's move is positive for the sector. The expected managed decline in the Northern Rock balance sheet should create less competitive mortgage market conditions," said analyst Robert Sage.
Who is this positive for? Certainly not the consumer. Competitive mortgage markets are the best thing that can happen to a consumer. Why should the consumer have to pay higher mortgage rates? Does this analyst think that the government setting mortgage rates is helpful in anyway? Let's not forget that the banks are responsible for this whole mess. Had they actually been careful in their lending practices, we wouldn't be in the mess we are currently in.
Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and a competitive advantage in established markets, preferably with a favorable global trend for support. But every once in while an exception is made for a non-conforming but innovative and promising company, and along these lines Gafisa S.A. looks attractive.
Gafisa S.A. (NYSE: GFA) constructs residential buildings in middle/upper income areas in 35 markets in Brazil. Analysts like Gafisa's huge inventory of land, construction in progress, and finished units, all of which will serve to increase earnings, moving forward.
Further, outstanding mortgage loans in Brazil are only 2% of GDP. That means there's room for the nation's mortgage-based home buyer segment to expand. Meanwhile, lower interest rates in Brazil are providing a tailwind for the nascent, local mortgage market. The First Call F2007/F2008 EPS consensus estimates for GFA are $1.38/$4.18. (Note: Only 1 estimate each year.)
The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case, and one growth company worth reviewing is American Movil SA.
Analysts see 2008 revenue rising of 15-20%, after a 32% increase in 2007. Further, analysts also like the company's successful expansion to 13 other markets in the region, to go along with its two key markets: Brazil and Mexico.
Hence, analysts also really like AMX's current subscriber base -- a remarkable 153 million in 2007 -- and its projected subscriber growth rate of 12-15% for 2008, and 10-13% for 2009.
"Based in Toronto, Kinross Gold (NYSE: KGC) has been in business since 1993 and is now the third-largest primary gold producer in North America in terms of reserves," notes Gordon Pape who has added the stock to his buy list.
The editor of Internet Wealth Builder sees strong upside potential, noting, "There are several reasons we like the prospects for Kinross at this time." Here is his review.
"The company operates nine mines in several countries including the United States, Brazil, Chile, and Russia, and has three new projects in the works which are scheduled to come on stream over the next two years. Overall, management estimates that production will increase more than 60% in the next two years, from 1.6 million ounce of gold in 2007 to 2.6 - 2.7 million ounces in 2009.
"The company also has a declining cost profile. Kinross says it expects its cost per ounce to drop as the new projects come on stream, making it unique among senior gold producers.
Among the many investment pontificators you will find in the media, I pride myself on laying everything out on the table, good calls, bad calls and even my unfortunate periodic stupidity. All of my 2008 picks are down to a varying degree, making me look none too smart in the opening weeks of the year.
Among the stocks I like, Anglo Amercican PLC (NASDAQ: AAUK) has gone down from the $30 level where I recommended it to around $25 a share today. Its 52-week low is $23.38, and its high was $38.75. It pays a dividend currently yielding about 2%.
There has been a push to get big in copper, and all of the news out of South America supports this theme. Meanwhile MarketWatch reported China now world's largest gold producer; foreign miners at door. China is now producing more gold than South Africa, which has been the top producer since 1905.
Readers of this space know that the investment thesis offered here favors large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable global trend as a support. And along this line, Companhia de Saneamento Basico do Estado de Sao Paolo, or SABESP, is worth an evaluation.
SABESP (NYSE: SBS) is Brazil's largest water company, serving 22.7 million people. SBS provides water via about 6.6 million connections. The company also offers sewage services through about 4.8 million connections and more than 400 treatment plants. The state of Brazil owns a 50.3% stake in SBS.
Analysts really like SBS's leadership position in Sao Paulo water services, and customer growth prospects: the company aims to increase its customer base by 2 million during 2007-2010. Further, Brazil's solid economic growth provides an added macroeconomic tailwind. The Reuters F2007/F2008 EPS consensus estimates for SBS are $4.76/$4.96.
As concerns over America's economy began to spread in 2007, many investors decided to look overseas for protection. In order to hedge themselves against a possible economic slowdown in the U.S., traders poured money into emerging markets such as India and China, but some are starting to question just how safe these markets will be this year.
Last year, when it looked like the U.S. economy was going to get hit with a weak dollar and nasty housing market, it made sense to look to different markets for protection, but now some are fearing that the problems that are plaguing America will reach a point where they will pull down foreign economies also.
What we have seen in 2008 is a pretty substantial downtrend in some of last year's favorite safe havens. Markets such as Korea, Thailand, Turkey and Brazil have all been hit in the first half of January and are down over 8 percent.
While many older oil fields are producing less than they used to, new discoveries of crude may make up for that. The Wall Street Journal reports, "Projects under way in Brazil, Saudi Arabia, West Africa, the Caspian Sea and the Gulf of Mexico will more than make up for natural declines from fields now in production."
If the information is accurate and oil demand falls due to an economic slowdown, prices for crude could drop over the next several years.
What is not clear is whether demand for oil in markets like China and India will continue to spike up. If the Chinese government is willing to underwrite the cost of gas and diesel for its industrial and consumer sectors, the use of oil in that country could continue to rise at an alarming rate.
Distorted demand, caused by the Chinese government, could be the wild card in oil pricing.
Douglas A. McIntyre is an editor at 247wallst.com.
Given the market's continued choppy / consolidating pattern (or perhaps worse), its makes sense to add a defensive stock or two, and one worth an evaluation is Agrium Inc. (NYSE: AGU).
Agrium is the No. 1 producer and seller of fertilizers for North America, including nitrogen, as well potash and phosphate products.
The company has an 8-million-ton nutrient production capacity, but production is only half the equation: AGU also has more than 400 retail outlets in the U.S. and South America – the back-end side of the revenue equation.
Readers of this space know that one argument forwarded here is that in the era of elevated energy prices oil/natural gas companies are likely to remain promising plays for the foreseeable future, baring the discovery of a cheap, widely-available, alternative energy source. And among oil/natural gas companies, Petroleo Brasileiro is worth a review.
Petroleo Brasileiro S.A. (ADR) (NYSE: PBR) is Brazil's largest industrial operation, with oil/gas production, refining and purchasing businesses, and oil/gas transport services.
Analysts like PBR's proven reserves of 15 billion barrels of oil equivalent, 12,900 wells, 16 refineries, 31,000 kilometers of pipeline, and 5,870 gasoline stations.
The price of crude moved to 
Among the many investment pontificators you will find in the media, I pride myself on laying everything out on the table, good calls, bad calls and even my unfortunate periodic stupidity. All of 
As concerns over America's economy began to spread in 2007, many investors decided to look overseas for protection. In order to hedge themselves against a possible economic slowdown in the U.S., traders poured money into emerging markets such as India and China, but some are starting to 
While many older oil fields are producing less than they used to, new discoveries of crude may make up for that. The Wall Street Journal 
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Oil hits record $127.43 on supply concerns, raised Goldman forecast
