BAGAKOAA June 3, 2010 Great Minds Think A Like
June 3, 2010 Great Minds Think A Like, or do they just read my blog?
I have to tell you I am so excited. I just watched today’s Mad Money and, well I think Cramer must have read my blog. Ya see I have been tagging my blog with the key words. Yesterday I did the spiel about oil, oil storage, and Natural Gas. Cramer did a whole segment on Nat Gas because on Tuesday, yes I missed it, our very own President Obama said, “. . . advocate for rolling back "billions of dollars in tax breaks to oil companies," expanding the nation's fleet of nuclear power plants and tapping into natural gas reserves,” This is one of the first up front statements he has made in support of Nat Gas. He will get behind the Clean Energy bill, and if this guy can pass the piece of crap legislation like the health bill and the yet to be defined financial regulation bill, even I think he can pass a sensible clean energy bill. Face it, not too many senators or congressman are going to stop a clean energy bill while we sit at the dinner table watching oil covered pelicans being pulled from oil gunked up marshes every night for the next 6 months. It will pass. Maybe Obama read my blog as well the night before and that is what got him behind the clean energy bill, yeah that’s the ticket.
Enough about me. How do we make a buck with this speculation? Well, again Cramer had a couple of good names and as usual some good logic behind the names. Remember I don’t usually care for many of the stocks he calls, but I always respect his logic. Today he had two to take a look at.
WPRT, Westport Innovations Inc. the research, development, and marketing of engines and fuel injection systems that use gaseous fuels, including natural gas, liquefied petroleum gas (LPG), hydrogen, and hydrogen-enriched compressed natural gas for the on-road commercial vehicle sector primarily in North America and Asia. The company offers engines utilizing gaseous fuels for transit and shuttle buses, conventional trucks and tractors, and refuse collection trucks, as well as specialty vehicles, such as short haul port drayage trucks, material handling trucks, street sweepers, and vehicles for selected industrial applications; direct injection LNG system for heavy-duty trucks; and engines fuelled with LPG primarily for the OEM forklift market. It also provides alternative fuel engines, and relevant parts and kits for use in automobiles, heavy duty trucks, power generation, and shipping applications; and cryogenic tanks for compressed natural gas or liquefied natural gas. The company was founded in 1995 and is headquartered in Vancouver, Canada.
CAUTION, this company has never made a profit. It has plowed every dollar earned and more into R & D and future growth. They were the first to put LNG buses on the roads of China. Even china was smart enough to know there is not enough oil to fuel their future growth. The clean air act will provide incentives to companies and municipalities to utilize clean energy fuels. Please read all you can on Westport BEFORE investing. I am going to initiate a small position tommorow at 17ish. I first looked at this stock in January when the CEO was on Mad Money. I almost pulled the trigger at 10.75 a share. The lack of free cash flow scared me away. I am feeling better now. The President is now talking about Nat Gas. I think its time to get on the bus.
Mad Money also talked about MDR McDermott International, Inc., through its subsidiaries, operates as an engineering and construction company worldwide. It operates in three segments: Offshore Oil and Gas Construction, Government Operations, and Power Generation Systems. The Offshore Oil and Gas Construction segment engages in the front-end design and detailed engineering, fabrication, and installation of offshore drilling and production facilities; and installation of marine pipelines and subsea production systems. It also provides project management and procurement services. In addition, this segment operates a fleet of marine vessels used in offshore construction and various fabrication facilities. The Government Operations segment manufactures and supplies critical nuclear components, fuels, and assemblies for government and commercial uses, as well as provides various services, including uranium processing, environmental site restoration services, and management and operating services for various U.S. Government-owned facilities primarily within the nuclear weapons complex of the U.S. Department of Energy. It also supplies research reactor fuel elements for colleges, universities, and national laboratories; offers uranium-based products used for medical isotopes; and converts or downblends high-enriched uranium into low-enriched fuel for use in commercial reactors to generate electricity, as well as provides heavy fabrications for industrial use, including components for defense applications. The Power Generation Systems segment supplies fossil-fired boilers, commercial nuclear steam generators and components, environmental equipment and components, and related services. It designs, engineers, manufactures, constructs and services utility and industrial power generation systems, including boilers used to generate steam in electric power plants, pulp and paper making, chemical and process applications, and other industrial uses. The company was founded in 1923 and is based in Houston, Texas.
The company has exposure in every segment of logical energy choices. It engineers and installs fossil fuel to gas conversions in plants and factories. It should be a prime beneficiary in any clean energy bill. I am looking at a small beginning position in the 20s tomorrow. Again read and do your homework on this one. Fundamentals on this one are much more impressive. Annual growth like WPRT is impressive, but they have a great margin, no debt and their Return on Equity is enviable. They forward looking multiple is 10 which makes it affordable.
UNG and FCG are two other ways to play a gas speculation. FCG is an index fund of a group of companies that derive most of their income from the exploration and production of Natural Gas. It is kind of like a mutual fund of Natural Gas producers. Some of its top holdings are Mariner Energy, Cimarex, Pioneer, EOG and Ultra Petroleum.
UNG, on the other hand is a prue commodity play via this ETF. It trades in relation to the near term futures of Nat Gas on the NY Merch Exchange. These are future contratcts not spot prices so keep that in mind.
The portfolio has owned both and I personally prefer the commodity priced UNG. It is up about 8% since President Obama added the words Nat Gas to his vocabulary. At 8.00 a share, I am getting in and this will be a 12-24 month play good or bad. It will take at least 3-5 years to get a meaningfull mass of LNG users, but then you should see the commodity go from its current $4-5 per million CF to 8-10. This ETF should see 20ish in two years.
Salve Lucrum and if I don’t post tomorrow, have a great weekend.