Growth vs. Debt
Growth vs. debt. That's the focus of the G20 meeting
that started over the weekend. The growth camp is led by U.S. President
Obama, while those focused on debt reduction are led by
Germany's Angela Merkel.
Initial proposals call for deficits to be cut in half by
2013.
There's no way that such "across the board" deficit
targets can be approved. The global economy is still facing deflationary
pressure. Drastic spending cuts will only make that worse.
At best, we can only hope that the G20 concludes its
meetings without any major dissension.
The first named
storm of the hurricane season is Alex, and it appears to be headed in to
the Gulf of
Mexico. Meteorologists don't expect the storm to
affect the BP oil spill clean up, but that didn't stop oil prices from
ramping over $2 a barrel on Friday.
Oil prices blasted through resistance at $78 and the
intersection of the 50-day and 200-day moving averages. Next up will be
resistance at $80.
The hurricane season is already off to an early start.
And if meteorologists are correct, it will be a busy season. Estimates
for the number of storms have been steadily rising. And that will keep
oil prices volatile, with an upside bias this summer.
31% of U.S. oil supply comes from the
Gulf of
Mexico. Any disruptions to Gulf supply will
benefit land-based oil producer. I know I've been in broken record mode
when it comes to oil companies working the Bakken oil pool, but it's
because there is so much money-making potential from this region.
There is virtually no political or environmental risk to
Bakken oil production. What's more, there is not much Bakken land left
for lease. Areas with the highest production potential have been snapped
up. That means the companies that are there already in the catbird seat
as far as increasing revenue (and stock prices) are concerned, they are
also takeover candidates.
Major oil companies that ignored the potential of the
Bakken oil pool have no way to get in on the action unless they buy their
way in through acquisition. And that provides another upside catalyst for
the stock prices of Bakken oil producers.
My top pick for
Bakken owns 80%-90% of two of the top three producing wells in the Bakken
pool. This company now has 23 Bakken wells completed. Average production
is 2,679 boepd. But that's just the beginning. It has 474 other drill
sites, and has an 11-year plan to drill 200+ wells over the next 11
years.
If the average daily production rate holds, this company
could be producing 1.3 million barrels a day.
Now, obviously, that's not likely. Some wells will dry
up in that time. But if the major integrated oil companies aren't licking
their chops over that supply, I'd be surprised. And I would also point
out that any buyout offer would have to take in the total potential
production over the next decade.
I don't see any way this company isn't worth a lot more
than the current price of $17 a share.
For more, click HERE.
Therumblings
about the potential for Chinese stocks are getting louder. Chinese stocks
have been in a wicked down trend for nearly a year now. And valuations
are extremely low.
Just because valuations are low doesn't mean a rally is
imminent. Valuations can get lower. But several of the uncertainties
about the Chinese economy have been lifted. Pressure on the yuan has been
relieved a little with the end of the currency peg. And real estate
prices have been coming down.
China remains one of the only
countries on the world putting up any kind of growth.
TradeMaster Daily
Stock Alerts' Jason Cimpl just got his readers in
couple very attractive Chinese stocks. And given Jason's track record of
getting his readers into certain stocks right before they make strong
moves higher in price, it's probably a good time to start moving into
Chinese stocks.
