If you were a regular watcher of the business news channels in the spring of 2011, you couldn’t escape one of the hottest, most heavily hyped stocks we’ve seen in the modern investing era.#-ad_banner-#​ An out-of-nowhere company suddenly sported a billion-dollar market value, and analysts and hedge fund managers alike proclaimed that it was still sharply undervalued. Its smooth-talking CEO made the rounds with the financial media, casually claiming that his company was on the cusp of a mining revolution that would outshine the 1849 gold rush. Yet with each passing quarter, it became apparent that the whole… Read More

If you were a regular watcher of the business news channels in the spring of 2011, you couldn’t escape one of the hottest, most heavily hyped stocks we’ve seen in the modern investing era.#-ad_banner-#​ An out-of-nowhere company suddenly sported a billion-dollar market value, and analysts and hedge fund managers alike proclaimed that it was still sharply undervalued. Its smooth-talking CEO made the rounds with the financial media, casually claiming that his company was on the cusp of a mining revolution that would outshine the 1849 gold rush. Yet with each passing quarter, it became apparent that the whole story was mere smoke and mirrors. Rare earth miner Molycorp (NYSE: MCP) become a dirty name among the legions of investors that got caught up in the hype, and its stock has been tossed into the discard bin. In hindsight, about the only thing this company was good for was its ability to separate investors from their money. At the time of its IPO in the summer of 2010, Molycorp had roughly 38 million shares outstanding. A series of capital raises led to the issuance of 130 million more shares, and the company still… Read More

Gold and silver prices have taken a dive in the past two and a half years. Silver prices have been cut in half since their 2011 highs, while gold has “only” shed about a third of its value since then.  Currently, silver is trading around $20 an ounce, and gold is trading at about $1,250 an ounce. Silver Standard Resources (Nasdaq: SSRI) is a major producer of silver, zinc and gold, based in Vancouver, British Columbia. Its main business is the exploration, development and acquisition of silver-dominant properties in the Americas. As you can see in… Read More

Gold and silver prices have taken a dive in the past two and a half years. Silver prices have been cut in half since their 2011 highs, while gold has “only” shed about a third of its value since then.  Currently, silver is trading around $20 an ounce, and gold is trading at about $1,250 an ounce. Silver Standard Resources (Nasdaq: SSRI) is a major producer of silver, zinc and gold, based in Vancouver, British Columbia. Its main business is the exploration, development and acquisition of silver-dominant properties in the Americas. As you can see in the chart below, SSRI (black line) sold off with the price of silver. But the stock seems to have hit bottom in October, with a low just above $5. Since mid-December, SSRI has been in an uptrend. It also appears to lead the metal (in both directions). #-ad_banner-#​SSRI is currently trading around $7.50, which is about 45% off its 52-week high. Instead of simply buying the shares and hoping that they will move up, we can use a covered call strategy to reduce our net cost and lock in a gain should shares rise… Read More

Despite the ongoing technological revolution in farming, Mother Nature has her limitations.  Nutrient-rich topsoil continues to erode, limited water resources remain depleted, and natural disasters continue to wreak havoc on production.#-ad_banner-# Compounding those issues, demand worldwide — particularly from emerging markets — is projected to increase drastically in the next few decades. The United Nations estimates that the global population will grow from 7.2 billion to 10 billion over the next 30 years. That growth will come mostly from emerging markets. The population in developed countries is expected to stay about the same at 1.3 billion, but the… Read More

Despite the ongoing technological revolution in farming, Mother Nature has her limitations.  Nutrient-rich topsoil continues to erode, limited water resources remain depleted, and natural disasters continue to wreak havoc on production.#-ad_banner-# Compounding those issues, demand worldwide — particularly from emerging markets — is projected to increase drastically in the next few decades. The United Nations estimates that the global population will grow from 7.2 billion to 10 billion over the next 30 years. That growth will come mostly from emerging markets. The population in developed countries is expected to stay about the same at 1.3 billion, but the combined population of the 49 least-developed countries is expected to double, to 2 billion.  That sets the stage for the emergence of a 3 billion-person global middle class that is going to need a lot of food. The U.N.’s Food and Agriculture Organization (FAO) projects food production will have to increase almost 70% in the next 30 years just to keep pace with demand. The Best Way To Cash In On A Global Food Crisis But investing in food companies is a terrible way to invest in the growing demand for food. That’s because rising prices at the grocery… Read More

Sometimes being unpopular is a good thing.#-ad_banner-#​ One of the major tenets of value investing is to buy stocks in industries that are out of sync in the business cycle or lagging in some form without having a compromised intrinsic worth.  Think of it like buying shorts and T-shirts in the middle of winter. You may not be using them right at that moment, but you’re guaranteed to find them on sale as retailers attempt to move inventory in favor of warmer, more seasonable clothes.  If you’re OK with buying something without expecting an immediate payout, you have… Read More

Sometimes being unpopular is a good thing.#-ad_banner-#​ One of the major tenets of value investing is to buy stocks in industries that are out of sync in the business cycle or lagging in some form without having a compromised intrinsic worth.  Think of it like buying shorts and T-shirts in the middle of winter. You may not be using them right at that moment, but you’re guaranteed to find them on sale as retailers attempt to move inventory in favor of warmer, more seasonable clothes.  If you’re OK with buying something without expecting an immediate payout, you have what it takes to be a classic value investor.  Last year was a banner year for the stock market — so where can we find “out of season” stocks? In the most unlikely of sectors: energy. Energy has performed well this year. The PowerShares Dynamic Energy Sector Portfolio ETF (NYSE: PXI) is up 27% since the start of 2012, but that doesn’t mean that all energy stocks are equal. Investors have been clamoring for green energy lately as evidenced by the gains in solar stocks: Guggenheim Solar (NYSE: TAN) is up an astounding 157% in the same period.  As the… Read More

Wicked winter weather has been rocking the entire country. According to the National Weather Service, the Northeast and Midwest have been experiencing “life-threatening” wind chill, with temperatures hitting multi-decade lows.#-ad_banner-# But while these extreme conditions have led to school closures, government shutdowns and massive traffic jams, they’ve also supported one of my favorite long-term investments. With the country suffering through a deep freeze, demand for natural gas has been surging. The United States Natural Gas (NYSE: UNG) exchange-traded fund is up 17% in the past three months and back within striking distance of the 52-week high just above $24. That… Read More

Wicked winter weather has been rocking the entire country. According to the National Weather Service, the Northeast and Midwest have been experiencing “life-threatening” wind chill, with temperatures hitting multi-decade lows.#-ad_banner-# But while these extreme conditions have led to school closures, government shutdowns and massive traffic jams, they’ve also supported one of my favorite long-term investments. With the country suffering through a deep freeze, demand for natural gas has been surging. The United States Natural Gas (NYSE: UNG) exchange-traded fund is up 17% in the past three months and back within striking distance of the 52-week high just above $24. That strong finish helped natural gas gain 32% in 2013, making it the year’s top-performing commodity. Cold weather has been a great short-term catalyst for natural gas. But the long-term outlook is even better: The natural gas boom is expected to last for decades. According to the U.S. Energy Information Administration, natural gas is on pace to become the country’s leading source of energy by the end of the decade. Source: U.S. Energy Information Administration That bullish trend is great news for energy investors operating ahead of the curve. But with that growth potential comes volatility. Energy… Read More

Twenty years ago, who’d have thought America would ever be anywhere near achieving energy independence? Back then, the majority of our fuel was imported, and the prevailing concern was the U.S. would always have to rely on foreign oil to meet its ever-growing energy needs.#-ad_banner-# Boy, have things changed. Now people are talking about America’s energy boom. According to the U.S. Energy Department, domestic oil production is reaching highs not seen since 1970 and should rise by around 800,000 barrels per day through 2016. Just this past October, the U.S. began producing more oil than it imports for the first… Read More

Twenty years ago, who’d have thought America would ever be anywhere near achieving energy independence? Back then, the majority of our fuel was imported, and the prevailing concern was the U.S. would always have to rely on foreign oil to meet its ever-growing energy needs.#-ad_banner-# Boy, have things changed. Now people are talking about America’s energy boom. According to the U.S. Energy Department, domestic oil production is reaching highs not seen since 1970 and should rise by around 800,000 barrels per day through 2016. Just this past October, the U.S. began producing more oil than it imports for the first time in nearly two decades. What’s more, domestic natural gas production is projected to climb 56% between 2012 and 2040, from 24.1 trillion cubic feet to 37.6 trillion. According to the International Energy Agency, the U.S. will overtake Saudi Arabia as the world’s top oil producer by 2015. It’s already No. 1 in natural gas production. Clearly, something huge is afoot on the domestic energy front. But before I say anything further, let me acknowledge the controversy around hydraulic fracturing (aka fracking), the relatively new drilling method that has enabled energy companies to extract previously unreachable reserves of oil and… Read More

Global investing isn’t for the faint of heart. There’s constant worries over politics, elections, the rule of law, economic policies, global trade… let’s face it, when you invest outside the U.S., you’re not in Kansas anymore. Anything can happen and sometimes does.#-ad_banner-#   Perhaps the most cautionary tale is investing in Argentina. Billionaire and hedge fund manager Paul Singer and his Elliott Management have had to sue the country to get paid on bonds the government defaulted on. Spanish oil giant Repsol had its 51% stake in YPF (NYSE: YPF) seized as Argentina sought to assert more control… Read More

Global investing isn’t for the faint of heart. There’s constant worries over politics, elections, the rule of law, economic policies, global trade… let’s face it, when you invest outside the U.S., you’re not in Kansas anymore. Anything can happen and sometimes does.#-ad_banner-#   Perhaps the most cautionary tale is investing in Argentina. Billionaire and hedge fund manager Paul Singer and his Elliott Management have had to sue the country to get paid on bonds the government defaulted on. Spanish oil giant Repsol had its 51% stake in YPF (NYSE: YPF) seized as Argentina sought to assert more control over its natural resources. This has kept Argentina off the radar screens of most investors. But now the smart money is venturing back into YPF. Mexican billionaire Carlos Slim purchased an 8.4% stake last year and is now the fourth-largest shareholder. Slim’s fellow billionaires George Soros and Richard Perry are also significant shareholders. The fact remains that Argentina is sitting on billions of barrels of shale oil that will be drilled for in the next 10 years — and YPF is the best way to play the coming oil boom in South America. YPF is a major integrated oil and gas… Read More

Gold had its first negative year in more than a decade as the bullish bias all but disappeared among investors. The yellow metal has had a 35%-plus drop from a record high above $1,900 an ounce in 2011. The June lows were tested in the past few weeks, but a bullish divergence (new lows in price without new highs in volatility) suggests the type of technical bottom that often puts in a long-term price base. SPDR Gold Shares (NYSE: GLD) was off nearly 30% last year, while the Market Vectors Gold Miners ETF (NYSE: GDX) was hit even… Read More

Gold had its first negative year in more than a decade as the bullish bias all but disappeared among investors. The yellow metal has had a 35%-plus drop from a record high above $1,900 an ounce in 2011. The June lows were tested in the past few weeks, but a bullish divergence (new lows in price without new highs in volatility) suggests the type of technical bottom that often puts in a long-term price base. SPDR Gold Shares (NYSE: GLD) was off nearly 30% last year, while the Market Vectors Gold Miners ETF (NYSE: GDX) was hit even harder with a decline of more than 50%. Therefore, miners offer greater reward to risk if and when gold stabilizes and recovers.   GDX is trading near its decade-plus lows around $16, which were made in 2008. A rally to the top of the nine-month trading channel at $30 is my initial target. #-ad_banner-#The $30 target is about 45% higher than recent prices, but traders who use a capital-preserving stock substitution strategy could see a 133% return on a move to that level. One major advantage of using a long call option rather than buying… Read More

Investors rarely have the chance to use “highflier” and “utility stock” in the same sentence, but that description fits a utility stock I first recommended nearly three years ago to a tee. #-ad_banner-#Since then, shares have climbed an impressive 67%. During the past three years, they’ve delivered an average annual return of 22.1%, besting the S&P 500’s three-year return of 15.2% by nearly seven full percentage points. I can almost hear you asking yourself, “What utility stock could possibly perform anywhere near that well? There certainly aren’t any domestic utilities that can do it.” And you’d probably be… Read More

Investors rarely have the chance to use “highflier” and “utility stock” in the same sentence, but that description fits a utility stock I first recommended nearly three years ago to a tee. #-ad_banner-#Since then, shares have climbed an impressive 67%. During the past three years, they’ve delivered an average annual return of 22.1%, besting the S&P 500’s three-year return of 15.2% by nearly seven full percentage points. I can almost hear you asking yourself, “What utility stock could possibly perform anywhere near that well? There certainly aren’t any domestic utilities that can do it.” And you’d probably be right. To identify this high-flying utility, I had to look to emerging markets where economies and energy use are typically growing much faster than in the United States. The company I found was a leading independent coal-fired energy producer located in China. Because the firm was cranking up output to keep pace with China’s economic expansion, sported a 4.7% dividend yield, and had a stock with below-average volatility, I thought every investor should know about it. I’m referring to Huaneng Power International (NYSE: HNP), which owns and operates approximately 175 primarily coal-fired power plants in 19 Chinese provinces and Singapore. Read More

The stock market rarely gives you a chance to prove your investment thesis in real-time. Expectations for share price moves usually take many quarters to play out, if not longer. Yet a recent set of events has opened a window to provide a simple test for a recent suggested trading strategy. Nearly two months ago, I noted that the early snowpack in Siberia was an accurate predictor of colder-than-usual weather in the United States. And that would have a profound effect on natural gas prices as consumption increased. That part of the thesis played out like a charm. It’s been… Read More

The stock market rarely gives you a chance to prove your investment thesis in real-time. Expectations for share price moves usually take many quarters to play out, if not longer. Yet a recent set of events has opened a window to provide a simple test for a recent suggested trading strategy. Nearly two months ago, I noted that the early snowpack in Siberia was an accurate predictor of colder-than-usual weather in the United States. And that would have a profound effect on natural gas prices as consumption increased. That part of the thesis played out like a charm. It’s been quite cold in much of the eastern United States, which led to a faster-than-expected drawdown in gas storage. And that has led natural gas prices to quickly spike. In that column, I recommended three companies that had an inordinately high exposure to gas, relative to most oil and gas producers. How have those stocks fared? Decently, but not nearly as fast as the underlying commodity price itself. #-ad_banner-#Considering gas prices have surged roughly 30% in that time, these moves might be seen as a disappointment, disproving the thesis that these… Read More