The holidays are officially here, with lots of time for fun with family and friends! I want to wish all Daily Profit readers a wonderful – and safe – holiday season. A few days off to spend with family and friends, time to reflect on past year and contemplate the year to come, is just what is needed.
This year my wife Carrie and I will be spending the holidays on the west coast with our families in Washington and Oregon. We plan to get out to some of the Willamette Valley vineyards to see what’s new in the wine barrel. I’m a big Pinot Noir fan (in fact, we named our Chocolate Lab puppy "Pinot") and love Oregon wine country.
And speaking of the holidays, I have a holiday gift for my loyal readers. You see, on Friday I’ll be reaching out to everyone with a special offer for my brand new Energy World Profits advisory service. But I want to give loyal Daily Profit readers an advance opportunity to start a trial subscription at a steeply discounted rate.
Normally, the Energy World Profits service goes for $399 a year, but for this weekend only I’m letting a privileged few sign up for only $199. And because you’re a long time reader of my email newsletter, well, I’m letting you cut in front of the line.
If you’re interested in profiting from the coming energy transition and you want to grab a limited-time 50% discount, than I invite you find out more when you click here.
***And speaking of energy prices. Falling supply and growing demand lead to only one thing in a free market economy – higher prices. Now you can argue that the United States is moving further away from capitalism with every bill to come out of Washington, but don’t tell that to oil traders. Crude oil for February delivery is pushing past the $75.00 level today after the American Petroleum Institute reported that inventories last week fell 1.6 million barrels more than expected. Analysts had expected a drop of 2 million, but the actual drop was 3.7 million.
Add in positive economic news in the form of higher housing sales which jumped 7.4 percent in November (a full 4.9 percent over analyst expectations), cold temperatures in the northeast creating demand for heating fuels, and you get an energy market that is poised to rally going into 2010. It is now almost a forgone conclusion that worldwide energy prices will rise in 2010. It may not be tomorrow, it may not be next week, but they will go higher.
Just look at natural gas and oil and its clear that energy prices bottomed earlier in the year. In early September, natural gas fell to a multi-year low below $2.80 before beginning its climb. It has found support three times in November and December at $4.40, and from this point has rallied 27% to $5.60. And after oil fell to a multi-year low of $35 back in the first week of January, it has found support at $70 and is quickly approaching $80 a barrel.
The coming rise in energy prices is the result of limited supply and growing demand. Supply is essentially fixed by what the earth has already produced. Energy prices fell in late 2008 and early 2009 on fears that the global economic slowdown would stymie economic growth and crush demand for the energy sources that power transportation and industry. Now that investor’s have realized that the Great Depression Part II is not on the doorstep and most have embraced the coming recovery (as evidenced by the over 60% rise for stocks since March), energy prices are rising.
Energy prices have bounced in the near term, and I see this as the first leg in a continued bull market for commodities. And because I’m so bullish on energy, including oil, gas, and alternative energy sources, I launched Energy World Profits with oil analyst Gregor MacDonald. Gregor is a seasoned expert on the energy patch and global demand for energy, and brings to our newsletter a unique outlook on the sector.
Working with Gregor, I’m finding some outstanding energy stocks for my investment portfolio, which I’ll be sharing with Energy World Profits subscribers. I invite you to join my new service and lock in a 50% discount off the regular price – just click here now to get started!
Debate over the exact timing of peak oil (the point when the world reaches a maximum rate of petroleum extraction, after which production will always be declining) adds an interesting dimension to energy price forecasts. Some experts think we’re past this point, and others think it won’t arrive until 2020.
But whether you think we are near, at, or past peak oil is largely irrelevant. Oil is becoming increasingly scarce and the rate of adoption of alternatives is nowhere near the rate of increasing oil demand. The discrepancy is even more exaggerated in emerging markets then it is here in the U.S.
So yes, I’m bullish on energy. So how can you use this to profit with small-cap stocks?
As the price of oil and natural gas goes higher, it becomes more attractive for oil and gas companies to go get it. The more it goes up, the more opportunity they have. So buy oil and gas drillers.
One of my favorites for natural gas is China Natural Gas (Nasdaq: CHNG), headquartered in Xian, China. Readers of SmallCapInvestor PRO have been aware of this stock for some time, and it is a cornerstone of our portfolio. In fact, subscribers are already up 76% on this stock with more gains on the way. The stock is showing attractive entry levels after a pull back and is now trading at just 9.9 times trailing earnings.
This is amazingly cheap for a company that grew revenues by 91% in 2008. Analysts have overlooked this one since natural gas prices collapsed, but I haven’t. After revenues stayed essentially flat in 2009, I’m expecting strong growth in 2010 as natural gas prices continue to climb from the bottom. You can learn more about this stock, and other energy stocks in the SmallCapInvestor PRO portfolio when you sign up for a no-risk trial subscription by clicking here.
***Finally, a little housekeeping. Our offices will be closed this Thursday and Friday (December 24th and 25th) for the holidays, and next Thursday and Friday for New Years (December 31st and January 1st). On these days we will not be publishing Daily Profit. Monday, Tuesday, and Wednesday of next week you will receive this daily letter as usual. And we’ll be back to a normal publishing schedule starting Monday, January 4.
Also, many of our staff will be taking time off from work to travel and relax with their families. We will address all subscriber e-mails as quickly as possible but please be patient if you send an e-mail on those days when our offices are closed.
Safe travels to everyone traveling this holiday season. And warm wishes to you and your family.