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10 stocks for a potential correction–revised for a new market

posted on April 23, 2013 at 8:30 am
stocks down 2

On February 25 I wrote a post naming 10 stocks to buy after a correction—just in case we were about to see one http://jubakpicks.com/2013/02/25/10-stocks-for-after-a-correction-if-we-get-one/

Turns out the weakness in February didn’t turn into a correction. The U.S. Standard & Poor’s 500 fell from 1531 on February 19 to 1487 on February 25, but then rebounded to 1593 by April 11. That 2.8% drop from February 19 to February 25 never reached the 10% decline to qualify as a correction.

But here we are again—in late April—with the U.S. market looking weak enough so that a correction is certainly not out of reason. Some economic and market conditions even make a correction now more likely than back in February. Just like in February I’m not predicting a correction—there are just too many moving parts right now to give me any confidence in a prediction here. I do think the odds of a more extended decline are now higher than they were in February. I think raising some cash makes sense here as a way to reduce the volatility of your own portfolio—and to give you some money to put to work at lower prices—if we do get a correction.

Just in case I think it’s a good idea to put together a list of stocks that you’d like to buy if we do get a correction here.

And because so much has changed since February I think it’s important to revise that list of potential buys. Read more

The oil world turned upside down–and how to invest in the rise of the U.S. to top global producer by 2017

posted on November 20, 2012 at 8:30 am
Oil rigs - land

Five years ago I never imagined I’d type these words.

By 2017 the United States will overtake Saudi Arabia as the world’s largest oil producer.

In addition, according to the International Energy Agency, by 2015 the United States will overtake Russia to become the world’s largest natural gas producer.

The United States is now the fastest-growing oil and natural gas producer in the world. During the last five years, according to Citigroup, the United States has added 2.59 million barrels a day to total production.

You’d think there’s an investable angle there somewhere.

I can think of two. No make that three.

First, there are the stocks of the companies that are responsible for this huge surge in U.S. production.

Second, there are the stocks of the companies that will make money from solving the current bottleneck in getting this supply to market.

Third, there are the sectors in the U.S. economy that will reap benefits from lower U.S. energy prices beyond the general advantage flowing to the U.S. economy from lower energy costs.

Let me start with the general picture and then move to individual sectors and trends. Read more

10 more good stocks for a bad market–and some thoughts on timing

posted on August 10, 2012 at 8:30 am

My daughter at 11 eats only one flavor of ice cream. She knows chocolate is the best flavor in the world at all times and under all circumstances, so why try anything else?

Me? I’ll go with chocolate fudge brownie one day, mocha chip another. Sometimes mint chip. If I’m at Grom, the closest you can come to Italian gelato in my neighborhood, it’s bacio or stracciatella. And I’m always ready to sign up for a special French vanilla.

I’ve got a similarly eclectic taste when it comes to looking for a good stock—different flavors appeal to me in different markets. In my Tuesday August 7 post http://jubakpicks.com/2012/08/07/buy-good-stocks-in-a-bad-market-is-a-great-strategy-but-what-does-it-mean/ I laid out the reasons behind a good stocks in a bad market strategy and started to sketch in some of the different flavors of good stocks.

I wound up with five flavors: dividend-paying good stocks, good stocks for trading either in swing trades or sector and seasonal trades, stocks so good they go up even when the market goes down, hammered favorites for a rebound, and finally traditionally defined good stocks. I said that I thought it was still too early for flavor five, traditionally defined good stocks, and that I’d talked enough recently about candidates for swing trades (flavor two), but that I would flesh out the other three flavors with some specific stock picks in a Friday post.

Well, it’s Friday and here’s that post. (By the way, this is starting to make me hungry. If this post ends in the middle, it’s because I needed an ice cream break.) Read more

Buy Concho Resources (CXO)

posted on February 14, 2012 at 4:06 pm

Back on January 13 I added Pioneer Natural Resources (PXD) to my long-term Jubak Picks 50 portfolio http://jubakpicks.com/jubak-picks-50/ . The logic, I argued in my post on that pick http://jubakpicks.com/2012/01/16/buy-pioneer-natural-resources-pxd-in-my-long-term-jubak-picks-50-portfolio/ was that Pioneer Natural Resources was part of the boom in U.S. oil production out of the tight shale formations of the Permian basin. Unlike wells drilled in natural gas shales, wells drilled in this region produce lots of liquids and with oil prices stuck north of $100 a barrel and natural gas prices stuck well south of $4 a BTU, investors, I argued, want to buy liquid-rich producers such as Pioneer Natural Resources.

The market apparently agrees. This pick is up 13.5% since I made it on January 13. At today’s price of $110 it’s closing in on the $115 target I set for December 2012. (At this point I’d say I’m likely to raise that target.)

Today I’ve got another play on the same story. Concho Resources (CXO) is a little smaller than Pioneer Natural Resources (a market cap of $11.7 billion versus $13.4 billion), a bit faster growing (with production in 2012 projected to climb by 28% at Concho versus 24% at Pioneer), slightly cheaper, and a bit riskier. Read more

Bust times for U.S. natural gas producers and boom times for U.S. oil producers could go on for quite a while–here’s how to reflect that in your portfolio

posted on January 27, 2012 at 8:30 am

It is the best of industries; it is the worst of industries.

And I think the energy position in your portfolio ought to reflect that U.S. oil stocks and natural gas stocks are headed in opposing directions. The underlying fundamentals of liquid hydrocarbons are so different from those of gaseous hydrocarbons in the U.S. market that the odds are that 2012 will bring higher share prices for U.S.-oriented oil producers and stagnant prices for U.S. natural gas producers.

And unfortunately for bottom fishers, I think the trends that have put natural gas in an energy deep freeze are set to last for a while.

This all has repercussions that extend well beyond the stocks of oil and gas producers because the conditions in these two energy sub-industries will have a huge effect on drilling and service companies and on chemical producers.

Here are two deals from Monday, January 23, that sum it all up. Read more

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