Archive for Energy sector
Home Energy Saver
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Many people do not realize that they could easily be piddling away their retirement money by letting energy escape through the cracks in their house. Not only that but old outdated lights, insulation, air conditioners, water heaters, and air conditioning ducts also can work towards sucking away your retirement savings.
 Instead of letting this happen why don’t you take your money out of the stock market and invest in your home. You will receive a higher return on your investment with little to no risk while improving the environment and reducing the number of power plants.
Start now to find the resources to make your home more energy efficient.
Natural Gas rises 2% in afternoon trading
Posted by: | CommentsNatural Gas spikes as electric rates hit 2 year low
Did the hurricane cause electric rates to go up
The hurricane past by Texas and the gulf of Mexico completely so you would think there wouldn’t be an issue. Since forecasters at Colorado State University went on to say, “the rest of the 2007 Atlantic hurricane season would be busy, with a total of 15 named storms”, we are seeing Natural Gas futures traders in a trading frenzy raising prices back up again. Is this wild speculation? Of course it is. We have no idea if one of these 15 huricanes will knock out a refinery or offshore rig but such is the energy futures market.
As businesses remain on the side lines watching electric rates continue to go down they may want to pay attention to what is happening as rates have spiked up today due to hurricane fears. 160 mile an hour winds are expected to ravage through the coast of Central America. Now why would this cause our Natural Gas prices to go up and with it electric rates? There are no easy explanations to this as it is not just about the hurricane. The complex world of natural gas futures and how they correlate with electric rates is not completely understood by anyone. You could make a good living buying and selling natural gas futures if you knew exactly what might cause natural gas to go up and down at any given moment. You would also need to know when short positions are ready to start covering and when long positions are getting ready to sell. That emotional aspect to the markets keeps things volatile. A storage report showing bad numbers could just as easily cause natural gas to go up as keep the market flat. There are other aspects in the market at work for one variable to be the deciding factor.
Historical energy trends in Texas
Historically Texas has seen a steady increase in Natural Gas prices over the long haul. The generation plants in Texas produce most of their electricity with this fossil fuel. Knowing that prices are at a respectable low in a 2 year time frame and knowing that Natural Gas is in high demand for years to come I would recommend locking in on a commercial energy contract for at least 2 years. Most energy traders and forecasters predict over several years Natural Gas does not have many other possibilities besides going up. If you look at the possibilities 5 years from now you may want to get in for awhile at this low price rather then seeing if rates may keep going lower. Remember, we are not a state made up of cheap energy generation like Nuclear. We rely on coal and natural gas more then we should and we should take advantage of its volatility while these prices remain low.
Energy sector, the US’s best stock performer
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Reflecting record-high oil prices, the energy sector has been the U.S. stock market’s best performer over the past three and five years, and among the best so far in 2007. For subscribers wondering whether it is time to lock up profits and move out of the oil patch, our answer can be found on our buy list.
| Ceradyne is up 75% since November but still has a P/E of less than 13. Click here for more undervalued best buys in Upside. |
The energy sector makes up 18% of our equal-weighted buy list, versus 6% for the S&P SmallCap 600 Index and 11% for the broader S&P 1500 Index.
Dawson Geophysical Company
Energy investors will need to be increasingly selective going forward, and subscribers should never let a single sector dominate their portfolios. But we remain comfortable overweighting the sector, for at least four reasons:
1) Based on Quadrix, there is no shortage of attractive energy stocks. Of the 695 U.S. stocks with overall scores above 80 along with value, earnings estimates and performance scores above 20 (our initial screen for new recommendations), 92 are energy stocks.
2) High prices for oil and natural gas are fueling robust cash flows for energy producers. Cash provided by operations, found on the statement of cash flow, is the lifeblood of capital-intensive energy firms. For oil and gas producers and integrated oil companies in the S&P 1500 Index, cash flow has grown nearly 24% annually over the last three years.
3) Accelerating cash flow is translating into capital spending. Capital expenditures for the S&P 1500 oil and gas producers and integrated oils reached $102 billion for the 12 months ended March, up 21% from a year earlier. Over the last three years, spending on capital expenditures has grown at an impressive 28% annual clip. Even if oil and gas prices drop sharply, which seems unlikely given supply and demand forecasts, capital spending should remain robust.
4) Shares of energy companies, especially equipment and services concerns, seem unduly cheap given well-defined growth prospects, even if per-barrel oil prices retreat by $10 or $15. The average energy stock in the S&P 1500 trades at 17 times estimated current-year earnings and 14 times next-year earnings. Yet profits, on average, are expected to increase 17% this year and 21% next year. As a group, energy stocks have seen aggressive upward revisions to profit estimates in recent quarters.
The three names reviewed below represent attractive values.
Gardner Denver (nyse: GDI ) is a leading maker of industrial pumps and compressors and one of the largest providers of reciprocating pumps used in oil and gas drilling, servicing and production. The company’s products are also used in medical, packaging and laboratory equipment. June-quarter earnings per share reached $0.83, up 34% but a penny below the consensus. Revenue rose 10%, keyed by a 16% increase in fluid-transfer products. Internal revenue growth was a healthy 6%. The order backlog rose nearly 7%.
Gardner Denver Inc
For full-year 2007, management lifted its per-share profit guidance to a range of $3.10 to $3.18, up from the $2.49 earned in 2006. Gardner Denver, positioned to exceed consensus profit estimates, is a best buy.
NATCO (nyse: NTG ) makes products that help filter impurities from oil and gas. NATCO services both onshore and offshore fields in most major producing regions. Robust exploration and production spending by customers, coupled with the declining quality of reserves, should sustain strong demand for filtration equipment. For 2008, Wall Street expects per-share earnings of $2.47 this year and $3.02 in 2008.
Considering NATCO’s growth prospects, debt-free balance sheet and cash of $2.50 per share, the stock seems undervalued at 18 times estimated year-ahead earnings of $2.67. NATCO, with an overall Quadrix score of 94, is being upgraded to best buy.
Tidewater (nyse: TDWÂ ) owns 455 ships, which make up the world’s largest fleet serving the offshore energy industry. The company supports all phases of offshore exploration, development and production. Services include towing and anchoring, pipe laying and seismic work. Tidewater earned $1.61 in the June quarter, up 31% but 3 cents below consensus expectations. Revenue increased 13%. Tidewater’s worldwide fleet utilization was a healthy 78%, while the average vessel day rate rose 15%.
Despite the June-quarter shortfall, consensus profit estimates for Tidewater have trended higher over the last month and now project per-share growth of 16% this year and 9% next year. Tidewater, trading at a reasonable nine times estimated year-ahead earnings of $7.21 per share, is rated “buy.”
For six more investing ideas in the energy sector, click on the slide show link below.