This comment was left by byzanman earlier this week. I decided to answer his question in my next blog post.
I am at the point where I will rarely go a week without having a short position but would be interested what you have to say about oil and metal stocks.
I'm currently bearish on oil and gas stocks because energy commodities have yet to rebound from their all-time highs in the first half of 2006. As long as international relations remain stable, and the US has access to its main oil pipelines, crude oil should hover around $60 a barrel. In fact, crude oil prices may dip in the short-term, which is why I maintain a 3-year time horizon on my energy stocks picks.
My Energy Watch list
Oil and Gas Driller – Helmerich and Payne
Helmerich and Payne (HP) is my oil and gas driller pick because their flex rigs are the most efficient in the drilling business.
Major Oil and Gas Company – Sasol Limited ADR
I've been watching Sasol (SSL), a South African integrated oil and gas company, for about 3 months now. I made a mistake by passing on the stock when Sasol shares were on sale for $31 in early October.
Sasol Limited ADR Company Report
Sasol Limited is an integrated oil and gas company with substantial chemical interests. In South Africa, it supports these operations by mining coal and converting it into synthetic fuels and chemicals through Fischer-Tropsch technology. The Company also has chemical manufacturing and marketing operations in Europe, Asia and the Americas. Its larger chemical portfolios include polymers, solvents, olefins, surfactants, surfactant intermediates, waxes, phenolics, ammonia, fertilizers and commercial explosives. The Company explores for, and produces crude oil offshore of Gabon, refines crude oil into liquid fuels in South Africa and retails liquid fuels and lubricants through a growing network of retail service centers. The segments in which the Company operates include Sasol Mining, Sasol Synfuels, Sasol Oil, Sasol Gas, Sasol Petroleum International and Sasol Synfuels International. (Source: MSN Money)
You get an international company that invests in oil, gas, and metals all in one. Though I missed SSL shares at a large bargain price, this stock has a lot more room to run.
My Metals Watch List
When it comes to the metals industry, one Peruvian firm has held my attention.
Gold Mining Stock – Minas Buenaventura SA ADR
Minas Buenaventura (BVN) is a Peruvian mining company that I've been watching for quite some time. The company increased retained earnings and cash investments for 4 straight years, while long-term debt has fallen from $132 million in 2001 to $1 million in 2006.
What's most impressive about this gold and silver miner is their effectiveness at keeping mines active. Management expects a long-life line from the majority of their mines, around 8 years for currently active mines.
I plan to add these 3 stocks to my ShareBuilder Portfolio in the next month. My focus for 2007 is cheap international stocks with improving margins, solid balance sheets, and trustworthy management.
What are your oil and metal stock picks?