It’s an exciting time again for clean energy stocks.  #-ad_banner-#To take a couple of examples, the Guggenheim Solar ETF (NYSE: TAN) is up 160% in the past 12 months, and the PowerShares Global Clean Energy ETF (NYSE: PBD) is up 60%.   But these gains pale in comparison to a group of small alternative-energy players that have generated some of the strongest gains of any stock in the past few quarters.  When I first looked at these companies back in mid-February, they had already posted sharp gains. Since then, they’ve surged yet higher. In just the past seven weeks, they… Read More

It’s an exciting time again for clean energy stocks.  #-ad_banner-#To take a couple of examples, the Guggenheim Solar ETF (NYSE: TAN) is up 160% in the past 12 months, and the PowerShares Global Clean Energy ETF (NYSE: PBD) is up 60%.   But these gains pale in comparison to a group of small alternative-energy players that have generated some of the strongest gains of any stock in the past few quarters.  When I first looked at these companies back in mid-February, they had already posted sharp gains. Since then, they’ve surged yet higher. In just the past seven weeks, they have risen on average around 65%. At this point, a mea culpa is in order. When I looked at this group back in February, I singled out Ballard Power (Nasdaq: BLDP) and Capstone Turbine (Nasdaq: CPST) for further gains — but suggested that Fuel Cell Energy (Nasdaq: FCEL) and Plug Power (Nasdaq: PLUG) likely had more limited upside. I noted that “It’s hard to see how these firms will ever generate robust profits, especially as they have several dozen rivals (most of which are privately held) pursuing the exact same niche.” Clearly, the broader market has no such… Read More

Bond investors have a good thing going for them. They finance part of a company’s operations in exchange for a return of capital at a later date and pocket steady interest payments along the way.  #-ad_banner-#True, they miss out on any growth the company might have, but for the most part they’re exposed to minimal risk. But what if you could have both an equity position and receive a high yield as well? Enter the master limited partnership (MLP). This asset class behaves much like common stocks do; they’re highly liquid, and as a shareholder, you benefit from… Read More

Bond investors have a good thing going for them. They finance part of a company’s operations in exchange for a return of capital at a later date and pocket steady interest payments along the way.  #-ad_banner-#True, they miss out on any growth the company might have, but for the most part they’re exposed to minimal risk. But what if you could have both an equity position and receive a high yield as well? Enter the master limited partnership (MLP). This asset class behaves much like common stocks do; they’re highly liquid, and as a shareholder, you benefit from the growth of the company. The secret to the appeal of MLPs lies in the tax treatment. Unlike a standard corporation, MLPs aren’t required to pay any taxes; instead they pass it on to unit holders.  The net effective tax rate for corporations in the U.S. is 40%. Dividends are issued only after all taxes have been taken out. Because MLPs bypass taxation, they pay out 90% or more of profits to the shareholder resulting in higher than average dividend yields.  MLPs are primarily tied to energy commodities, a sector that’s been red-hot for the past couple of years. Thanks… Read More

The energy sector has showed great relative strength in recent weeks. While the broader market has been choppy and momentum groups such as social media and biotech have taken a beating, energy stocks have steadily rallied. #-ad_banner-#​ This constructive price action led me to take a closer look at a number of energy stocks, one of them being Chesapeake Energy (NYSE: CHK). The natural gas and oil producer looks enticing from a technical standpoint, as it appears to be on the verge of breaking out of a multi-month trading range. On March 28, the Energy Select Sector SPDR (NYSE:… Read More

The energy sector has showed great relative strength in recent weeks. While the broader market has been choppy and momentum groups such as social media and biotech have taken a beating, energy stocks have steadily rallied. #-ad_banner-#​ This constructive price action led me to take a closer look at a number of energy stocks, one of them being Chesapeake Energy (NYSE: CHK). The natural gas and oil producer looks enticing from a technical standpoint, as it appears to be on the verge of breaking out of a multi-month trading range. On March 28, the Energy Select Sector SPDR (NYSE: XLE) broke past a multi-month resistance level around $88.50, which may be just the beginning of a multi-month rally.  Considering that the current bull market in equities is about 5 years old, it’s likely getting somewhat long in the tooth, at least by historical standards. I think we’re in the late innings of a cyclical bull market, which often favors large caps, as well as basic materials and energy stocks. For a better view of relative performance, I often turn to ratio charts. Ratio charts show just that, a ratio between two securities or indices, such as the… Read More

Shares of energy producer Encana (NYSE: ECA) have been moving steadily higher since January. In fact, while the S&P 500 Index is only up about 2% for the year, ECA investors have enjoyed a gain of 18% on their stock position. And this doesn’t even include the $0.07 dividend the company paid to investors of record on March 12. #-ad_banner-#Of course, one of the challenges with a runaway stock like ECA is that it is difficult to jump on board once it has already begun to trade sharply higher. Investors who buy at… Read More

Shares of energy producer Encana (NYSE: ECA) have been moving steadily higher since January. In fact, while the S&P 500 Index is only up about 2% for the year, ECA investors have enjoyed a gain of 18% on their stock position. And this doesn’t even include the $0.07 dividend the company paid to investors of record on March 12. #-ad_banner-#Of course, one of the challenges with a runaway stock like ECA is that it is difficult to jump on board once it has already begun to trade sharply higher. Investors who buy at new highs risk purchasing the stock at a peak, only to see the price pull back. But investors who decide to wait until the stock pulls back could find themselves on the sidelines while potential profits are missed and the stock continues to trend higher. Selling puts for income is a good way to participate in a stock that has established a strong bullish trend, while avoiding the risk of purchasing at the peak of that trend. By selling puts against the stock, we commit to buying shares if the stock pulls back below the strike… Read More

As executives prepare to announce a major multi-billion-dollar acquisition to the public, they usually grow very excited about an enthusiastic response from key shareholders.  But when copper miner Freeport-McMoran Copper & Gold (NYSE: FCX) announced a pair of acquisitions in the oil and gas sector, worth an estimated $20 billion, investors did a spit-take.    #-ad_banner-#At the time, investors wondered why the world’s largest copper miner would diversify away into a completely unrelated industry. And they grew alarmed at the amount of debt taken on to complete the deal. More than a year later, shares remain… Read More

As executives prepare to announce a major multi-billion-dollar acquisition to the public, they usually grow very excited about an enthusiastic response from key shareholders.  But when copper miner Freeport-McMoran Copper & Gold (NYSE: FCX) announced a pair of acquisitions in the oil and gas sector, worth an estimated $20 billion, investors did a spit-take.    #-ad_banner-#At the time, investors wondered why the world’s largest copper miner would diversify away into a completely unrelated industry. And they grew alarmed at the amount of debt taken on to complete the deal. More than a year later, shares remain below where they were before the deal was announced, and many investors still see the deal as a head-scratcher. Yet in coming years, these bold strokes are likely to be seen in a much better light. Static Enterprise Value — Higher Market Value? Although Freeport-McMoran eventually announced plans to sell some assets to raise cash, the company’s long-term debt spiked from $3.5 billion at the end of 2012 to $20.7 billion at the end of 2013. In tandem with the current market value for its equity, FCX’s total enterprise value stands at around $53 billion. … Read More

Warren Buffett famously observed that success in investing is mostly about what you don’t do, rather than what you do. Specifically, that if you have guidelines for investments (which you should), only a few companies will meet these hurdles. Otherwise, it’s better to leave the bat on the shoulder than take a swing. This is today’s problem with the petroleum sector… it isn’t meeting my guidelines for a great investment. Back in February, I outlined some of the reasons why I’m largely staying away from this sector. The simple fact is that great business performance isn’t the only thing I’m… Read More

Warren Buffett famously observed that success in investing is mostly about what you don’t do, rather than what you do. Specifically, that if you have guidelines for investments (which you should), only a few companies will meet these hurdles. Otherwise, it’s better to leave the bat on the shoulder than take a swing. This is today’s problem with the petroleum sector… it isn’t meeting my guidelines for a great investment. Back in February, I outlined some of the reasons why I’m largely staying away from this sector. The simple fact is that great business performance isn’t the only thing I’m looking for from my stock picks. You see, an excellent business doesn’t necessarily make a great investment. It all depends on price. #-ad_banner-#The oil sector is still loved by investors who are fascinated with the “miracle” of surging U.S. shale production. Income investors are loving several of these oil-related stocks too — especially ones paying lucrative dividends that grow increasingly larger every year. As a result, valuations for popular oil producers are pushing multi-year highs. Consider a high-profile petroleum developer such as Range Resources (NYSE: RRC). This company has done a phenomenal job discovering and producing natural gas from its… Read More

The price of gold has declined below the weekly pivot at $1,300 an ounce, presenting a potentially lucrative buying opportunity. The nearly $100 drop in the metal over the past two weeks is about half of the recent run-up from the double-bottom lows. Despite the recent decline, SPDR Gold Shares (NYSE: GLD) is up nearly 7% as the first quarter comes to a close. However, over the past 52 weeks, GLD is down 28%. And as you can see in the chart below, miner Barrick Gold (NYSE: ABX) has been hit even harder, off 38%.  On… Read More

The price of gold has declined below the weekly pivot at $1,300 an ounce, presenting a potentially lucrative buying opportunity. The nearly $100 drop in the metal over the past two weeks is about half of the recent run-up from the double-bottom lows. Despite the recent decline, SPDR Gold Shares (NYSE: GLD) is up nearly 7% as the first quarter comes to a close. However, over the past 52 weeks, GLD is down 28%. And as you can see in the chart below, miner Barrick Gold (NYSE: ABX) has been hit even harder, off 38%.  On July 5, ABX made an extreme low at $13.43, but this low was not accompanied by new highs in volatility. This bullish divergence suggests a long-term bottom was put in place. Sideways trading action between $22 and $14 since April has midpoint support at $18 to lean on. The $8 channel targets $30 on an upside breakout above $22 resistance.  #-ad_banner-#The $30 target is about 68% higher than recent prices, but traders who use a capital-preserving, stock substitution strategy could make nearly 200% returns on a move to that level. One major advantage of using a long call… Read More

It’s been nearly half a decade since the Deepwater Horizon incident spilled millions of barrels of oil into the Gulf of Mexico and killed 11 workers. However, investors and the nation as a whole will not forget the incident anytime soon. #-ad_banner-#Thus, many investors continue to shun shares of one of the key participants in the accident, BP (NYSE: BP). Yet, a couple of billionaires think the overhang from the Deepwater Horizon incident has presented an attractive buying opportunity. First, Seth Klarman and his Baupost Group hedge fund owned 5.6 million shares of BP as of the end of 2013. Read More

It’s been nearly half a decade since the Deepwater Horizon incident spilled millions of barrels of oil into the Gulf of Mexico and killed 11 workers. However, investors and the nation as a whole will not forget the incident anytime soon. #-ad_banner-#Thus, many investors continue to shun shares of one of the key participants in the accident, BP (NYSE: BP). Yet, a couple of billionaires think the overhang from the Deepwater Horizon incident has presented an attractive buying opportunity. First, Seth Klarman and his Baupost Group hedge fund owned 5.6 million shares of BP as of the end of 2013. Klarman has been a fan of BP since early 2011. Second, David Einhorn of Greenlight Capital owns nearly a million shares. Greenlight’s stake in BP was a new position at the end of 2013. Recent Contract Wins Since the spill, BP has been making strides in the right direction. The company remains the largest leaseholder in the Gulf region and second-largest oil producer. It has over 650 leases in the region and 10 drilling rigs — up from the six it had in 2010. In 2013, its underlying production in the Gulf grew for the first time since 2009. Read More

Everywhere you turn these days, you’ll read another story about a massive wave of insider selling taking place. For example, a University of Michigan finance professor recently told MarketWatch that “The current message of the insider data ‘is as pessimistic as I’ve ever seen over the last 25 years.'” #-ad_banner-#Can you blame them? Millions of dollars in paper profits have been created for thousands of employees at public companies, and none of them want to wait around in case the market pulls back. But even as the levels of insider selling have surged, there has also… Read More

Everywhere you turn these days, you’ll read another story about a massive wave of insider selling taking place. For example, a University of Michigan finance professor recently told MarketWatch that “The current message of the insider data ‘is as pessimistic as I’ve ever seen over the last 25 years.'” #-ad_banner-#Can you blame them? Millions of dollars in paper profits have been created for thousands of employees at public companies, and none of them want to wait around in case the market pulls back. But even as the levels of insider selling have surged, there has also been a considerable amount of insider buying. I’ve pored through a few hundred recent filings to spot which companies have solid clusters of buying, and I’ve noted that some of the most intriguing purchases are taking place in the energy sector. (All data provided by InsiderInsights.com.) 1. Diamond Offshore (NYSE: DO ) It’s turning out to be a tough year for companies that lease deepwater drilling rigs. A glut of rigs has led to falling lease rates, and you can see the trend in this firm’s numbers. Sales peaked at $3.3 billion in 2011, and earnings… Read More

You may not know it, but while Google (Nasdaq: GOOG) and Facebook (Nasdaq: FB) build their data centers near utilities that generate clean energy, then buy power from them… Apple (Nasdaq: AAPL) builds its own power plants. #-ad_banner-#Apple recently finished the first phase of a 20,000-square-foot data center in Reno, Nev. The construction includes a 137-acre solar array called Fort Churchill that, when completed, will provide 18 to 20 megawatts of power. And six months ago, Apple announced plans to build a second solar panel farm on the property. Apple also owns a data center in North Carolina, the largest… Read More

You may not know it, but while Google (Nasdaq: GOOG) and Facebook (Nasdaq: FB) build their data centers near utilities that generate clean energy, then buy power from them… Apple (Nasdaq: AAPL) builds its own power plants. #-ad_banner-#Apple recently finished the first phase of a 20,000-square-foot data center in Reno, Nev. The construction includes a 137-acre solar array called Fort Churchill that, when completed, will provide 18 to 20 megawatts of power. And six months ago, Apple announced plans to build a second solar panel farm on the property. Apple also owns a data center in North Carolina, the largest of its kind in the U.S., powered by two solar farms that generate 42 million kilowatt-hours of clean, renewable energy annually for the 100-acre, 20-megawatt facility. Finally, Apple has two other 338,000-square-foot data centers in the works in Prineville, Ore. — down the road from Facebook’s — which will incorporate solar energy as well. What’s important for investors is all of these huge facilities are being built by one company. As you could imagine, being an Apple partner has contributed to a healthy increase in this company’s share price. In the past year, shares have jumped 168%. Believe… Read More