Beginnerinvesting101's Blog

Steel, Coal, and Natural Gas Stocks

Joseph — Fri, 12 Feb 2010 19:24:39 +0000

Well let’s look long term and continue where we left off yesterday. Look towards the future of growth. Where is it? NATURAL GAS. Finally this week, Obama mentioned natural gas for the first time after being a year in office. The U.S. has billions and billions of natural gas reserves under its own soil. Soon, the large natural gas companies and energy companies like XTO and Clean Energy are going to be putting pipelines for the natural gas. Why natural gas though?

Natural gas is 30% cleaner than regular gas and gives less emissions into the atmosphere. We have it and will not be as reliable on foreign oil and it is much cheaper, cheaper than coal is. The U.S. also has plenty of reserves of coal under its soil in areas of the Virginia, Pennsylvania, and Missouri. Now let’s think here…you may be thinking get rid of coal since natural gas will start to make it obsolete since it is cheaper, thus driving the coal prices down and lowering profits of coal companies. You may also want to buy steel companies since the pipelines for these natural gas companies will need to be made out of steel. These companies say they have plans to make pipelines TRILLIONS OF FEET LONG! That’s some big bucks for Nucor and American Steel.

But wait, there’s one more thing. What is needed to make steel? COAL. Not just any coal, however. The cleanest, purest coal is the only kind that can be used in making steel. This coal is found in South America, mainly Columbia where there is a good amount there. This is called metallurgical coal and can be used for making steel. You do the math, trillions of pipelines of steel, that needs plenty of metallurgical coal. Companies that have access to these global coal like ACI and BTU are big players. I like these three stock for the long future, Clean Energy CLN, Peabody Coal BTU, and Nucor NUE.

Stay tuned.

Buy Coal for the Chinese New Year

Joseph — Thu, 11 Feb 2010 23:18:21 +0000

The Chinese New Year is coming up on Sunday February 14, 2010. Last year, all coal stocks went up on January 26 and 27th last year 2009. Why? I was confused when I first saw this because when the Chinese celebrate the New Year, they celebrate for up to 2 weeks. It is one of the biggest holidays worldwide. The reason these stocks shot up is because when the Chinese shut everything down, they begin to import more. They also are willing to pay premiums for this short period of time so they can celebrate the New Year.

The markets have been volatile lately, especially coal stocks. This is due to the worries in China that is grew too fast and may be close to falling back into a recession. However, these worries are starting to dwindle after seeing China’s high demand for copper. China is the largest natural metal user in the world. Look for worldwide coal stocks like Peabody Energy (symbol BTU) to go up along with MEE, JOYG, CNX, and BUCY. All these stocks are associated with coal and should shoot up during the short Chinese New Year period. However, do not look at coal in the long run. Why?

Stay tuned.

Activision Blizzard Earnings Top Street: Why “Experts” Are Not Always Right!

Joseph — Wed, 10 Feb 2010 22:39:16 +0000

Activision Blizzard symbol ATVI beat earnings on their conference call today. Estimates had them at 43cents a share but they pulled off 49cents. This is wonderful news for long haulers like me since I have owned the stock since November and love the company. On top of that, they declared dividends of 15 cents a shares annually! Granted this may not sound like much, but I am having a great day. Wait, there’s more! They also announced they are so confident in their company they are going to buyback $1 billion of their common shares! Three beatiful pieces of information at once, I can hardly contain myself.

This is a prime example why the analysts and “experts” are not always right. In fact, they are wrong most of the time. There are people like me who actually study and are personally involved with certain companies and industries that know some things better than the pros. ATVI is a great company but has recently been a terrible stock. All because “experts” believed the video game industry was not doing well. Although they are right, this company is an exception. They are obviously doing well and claim they will do even better for 2010. I love ATVI long (plus I was bullish on it short too $$$

Stay tuned

The Bears Are Taking Over

Joseph — Mon, 08 Feb 2010 22:30:42 +0000

The market did little today until the last hour…I find this very suspicious. Why? Well if you were watching CNBC today you saw what some of their “expert” traders had to say. They mentioned the market was going to sway very little until the last hours of trading. Low and behold, it happened just as they predicted (of course, I even guessed that). What I did not guess was that the bears would take over.

There was no news whatsoever for the bulls to take the market today nor was there news for the bears. I did not expect the market to drop triple digits today, then again, it is Monday. Over history the stock market has dropped mostly on Mondays simply because of weekend worries. This means on the two days the market is closed there is possibilities of news to come out to scare the people or to simply have them panic and second guess themselves.

The bears utilized this theory at the perfect time so they could act in unison at the last hour of trading to make huge profits. Of course, headlines say the market declined due to global economic worries. That is baloney as there was no major headline to influence such thinking. The point is that the bulls chose to stay put today. For tomorrow watch for the bears to turn into bulls as the market should rise into triple digits. The bears have taken over and now it is the bullish time to take over into profitable territory. As long as there is no bad news that comes out tomorrow, the market should rise the rest of the week.

Stay tuned

The Traders Are Behind the Wheel

Joseph — Fri, 05 Feb 2010 21:38:58 +0000

The market was down as much as 167 points today. The market should have been up today as the excuse for its decline was economic worries. I assure you this is a massive cover up and lousy excuse. The traders knew what was coming and they are officially in full control. The reason why the market should have been up greatly today was because the national unemployment rate decreased unexpectedly from over 10% to 9.7%. Also, the unemployment rates from part time workers looking for full time jobs along with discouraged workers decreased from over 17% to 16.5%. This, analysts believe, is a better representative of the unemployment rate.

This is great news. This symbolizes growth in our economy finally however it seems that the traders already had their shorts ready. As soon as the market was down, the buyback surge began, thus creating one of the greatest daily rallies we have seen in months. Volume is up like crazy as of late. If you notice, many stocks with a volatility over 50 will have a surge in volume in the last 5 minutes of the market hours. The question is knowing whether or not these are shorts. When you know how the traders are going to react to the market, you know how the market will react.

Stay tuned

Why Ebix’s Stock Has Fallen

Joseph — Wed, 03 Feb 2010 18:35:29 +0000

Last night on the lightning round on Jim Cramer’s Mad Money someone mentioned Ebix. They, like many, are unsure why Ebix stock has dropped ever since it had a 3:1 split in early January. Cramer said he believes this is because there were rumors that the company is right on target with the analyst estimates for earnings for the fourth quarter of 2009. He says this is why the stock has fallen. In this kind of economy, we need to invest in company’s that strive to beat expectations and will not simply settle for the expected amount. However, I am personally confused. This company is expected to grow rapidly and let’s face it, since when have all the rumors you ever heard always been true? I think it is a 50/50 chance someone can predict what will happen to a company and its earnings results. You cannot predict the short term markets. If Cramer is right, this company may not be the best bet. After all, we want company’s that will go the distance and beyond when it comes to growth and profit.

Stay tuned

Apple’s Stock is still cheap

Joseph — Fri, 29 Jan 2010 19:31:14 +0000

Apple’s stock surged this past week to an all time high of $215 per share. That’s because it posted high earnings and good profits for 2009. You may be thinking, this stock is too expensive at $200 a share. On the contrary, this stock is actually somewhat cheap according to its true value computed by the proper ratios. It’s 1 year forward PE is only 14.93 and its PEG 5 year expected is .98-still less than one!

Apple Inc. just came out with their new iPad to compete with Amazon’s Kindle. So far, the iPad is basically a portable laptop in itself and runs for only $600- much cheaper than the public anticipated. The company still has plenty of room to grow and is expected to grow much faster than its sector and industry this year.

If you have the money to invest, Apple’s stock is still cheap and looks pretty good right now. Their balance sheet is strong and they have a good profit margin. There is plenty of room for growth yet in this company as I am always a believer in technology stocks. The sky is the limit.

Stay tuned

What will Bernanke do?

Joseph — Tue, 26 Jan 2010 18:24:44 +0000

Tomorrow is a big day for the economy and the stock market. Tomorrow Federal Reserve Chairman Ben Bernanke will make a big decision as to how the economy is doing. I think he will raise the interest rates. My reasonings behind this is because the economy is showing signs of improvement. Also, today, consumer confidence has increased. This marks the third consecutive month of an increase.

What I truly believe will influence Bernanke’s decision is the financial corporations. We the people do not see what is going on behind the curtain. We do not see the lobbyists that are paying of our Congressmen thus persuading their votes. These financial companies want interest to go back up so they can start making more profits, especially since they are in a battle with angry President Obama. Obama says these banks have plenty of time to make profits, but now is not that time. He wants them to worry about paying off their stimulus money. These financials do not care. They want profits. The only way to do that is to send their lobbyists to sway buy votes for Senators to vote against another term for Bernanke unless he raises the rates. I think Bernanke will raise them because of this alone. Who would not want to be re-elected as chairman of the Federal Reserve. After all, the Fed does not need to ask the government what to do before they make a decision. Bernanke is probably being bribed by lobbyists as well I imagine. No fat cat on Wall Street or the government can resist this evil, green temptation.

Google’s Earnings

Joseph — Sat, 23 Jan 2010 01:07:20 +0000

Stocks nowadays no longer follow traditional trading rules. Last time I checked, when a company posts soaring profits and crushes earnings, that stocks goes up for that day no matter what the market does. I guess times have changed. Google posted fourth quarter profits for 2009 that soared 5 fold! They had a huge improvement from last year.

Of course their stock got downgraded today from buy to hold. As if that was not enough to pull Google’s party it should have had today down, the market dipped so much due to President Obama and his new battle with the big banks. Google’s stock dropped 5 1/2% today because of this. This should not have happened to Google today. Increased profits of that rank for a company no one thought had that kind of growth still is amazing. This truly displays the potential of Google along with the technology sector. Regardless of the economic news today and that foolish downgrade, their stock should have soared today. What ever happened to the stock market basics?

This illustrates that no trader can truly predict the stock market. Everything is so deeply dependent on economic news. It seems as though it no longer matter how good a company does anymore. The only thing that matters is what experts think and what happens in the news for that day. I can only hope long term investing does not change its staples like that of the trader, otherwise, I’m screwed.

Stay tuned

Metro PCS Stock Pick

Joseph — Fri, 22 Jan 2010 05:24:52 +0000

Another stock pick I like right now is Metro PCS (symbol PCS). I was talking to my sister and she told me how she just got a new cell phone from them. She said she gets unlimited texting and phone calls for only $40 a month! I could not believe it. Now after talking to her numerous times not once was the call dropped. She is in Florida and I am in Ohio if that matters for you techies. She also mentioned how they just expanded their coverage with more towers nationwide recently and are still growing. A trigger went off in my brain…I HEARD THE G WORD!

In case you did not know, I love growth. The technology sector is the best place for that right now. If you go on Yahoo Finance, this is clear as they pay the least dividends. That is because most technology companies are growing. Metro PCS is no different. They are in long term debt, but I believe it is only because of these capital expenditures from new towers. Do you know how much I pay with Verizon? Twice as much as my sister and I don’t even have unlimited. Verizon and AT&T are way too overpriced with their contracts. Metro PCS is attracting the right people.

They still have more Total Assets than liabilities and their 1 year forward PE ratio is under 13. Their 5 year expected PEG is less than one. This stock is dirt cheap, literally and figuratively. Look for Metro PCS to shoot up by the end of this year.

Stay tuned