Best of the Week
Most Popular
1.U.S. Housing Bull Market Over? House Prices Trend Forecast Current State - Nadeem_Walayat
2.The Coming U.S. Economic Collapse Will Trigger a Revolution - Harry_Dent
3. Stock Market Crash a Historical Pattern? - Wim_Grommen
4.Global Panic - U.S. Federal Government Stockpiling Ammo – Here’s What We’re Going to Do - Shah Gilani
5.AI, Robotics, and the Future of Jobs - Aaron Smith
6.This is Your Economic Recovery With and Without Drugs - James_Quinn
7.Gold and Silver Price Getting Set To Explode Higher - Austin_Galt
8.The Something for Nothing Society - Lifecycle of Bureaucracy - Ty_Andros
9.Another Interesting Stock Market Juncture - Tony_Caldaro
10.Inflation vs the Deflationary Straw Man - Gary_Tanashian
Last 5 days
Stock and Commodity Market Ratio Messages - 2nd Sep 14
Gold Price - The Thin End of the Wedge - 2nd Sep 14
U.S. Inflation Pressures in Core Food Components - 2nd Sep 14
Independent Scotland Currency, Plan A, B, C or D - British or Scottish Pound? - 2nd Sep 14
Gold and Silver Price A Critical Juncture - 2nd Sep 14
Gold and Silver Precious Metals Complex Contradiction and Potential - 2nd Sep 14
France And The Long-Gone Thatcher Moment - 2nd Sep 14
Stock Market Approaching An Important High? - 2nd Sep 14
Gold, Silver Price Summer Doldrums Coming to an End - 2nd Sep 14
The Ultimate Demise Of The Euro Union - 1st Sep 14
Palladium Price Breaks Multi-Year High Over $900 - 1st Sep 14
When Complexity Becomes Chaos - 1st Sep 14
Designer War By Default - 1st Sep 14
Islamic State or Russia? Ten Key Questions Towards Pragmatism - 1st Sep 14
Mixed Emotions for the Gold Market - 1st Sep 14
These Clowns Are Dragging Us Into War with Russia - 1st Sep 14
Marx And The Capitalist Cancer Of Overproduction - 1st Sep 14
Scottish Banks Salivating at the Prospects for an Independent Scotland of 6 Million Debt Slaves - 1st Sep 14
Small Man Europe Is Now In “Effective State Of War” With Russia - 31st Aug 14
The Unintended Blowback Of False Flags - 31st Aug 14
Tesco Supermarket Death Spiral Latest Profits Warning and Dividend Slashed - 31st Aug 14
Dow, Gold and Silver - A Last Stand, A Fake Out And A Surge - 31st Aug 14
If U.S. Consumers are so Confident Why aren't They Spending? - 31st Aug 14
Scotland Independence House Prices Crash, Deflationary Debt Death Spiral - 31st Aug 14
Obama’s “Catastrophic Defeat” in Ukraine - 30th Aug 14
Stock Market Inflection Point Approaching - 30th Aug 14
Gold And Silver - Elite's NWO Losing Traction. Expect More War - 30th Aug 14
Corporations Join Droves of Americans Renouncing US Citizenship - 30th Aug 14
Peter Schiff U.S. Housing Market, House Prices Bubble Warning - 30th Aug 14
Russia, Ukraine War - It’s Time to Play the “Gazprom Card” - 29th Aug 14
The One Tech Stock Investment You Should Never Sell - 29th Aug 14
Bitcoin Price $500 as Current Downside Barrier - 29th Aug 14
Don't Get Ruined by These 10 Popular Stock Market Investment Myths - 29th Aug 14
Low Cost Transcontinental Gold - 29th Aug 14
Gold Bullish Central Banks Should Give Money Directly To The People - Helicopter Janet? - 29th Aug 14
US House Prices Bull Market Over? Trend Forecast Video - 29th Aug 14
The Fed Meeting at Jackson Hole Exposed Yellen’s Greatest Weakness - 29th Aug 14
AAPL Apple Stock About To Get sMACked - 29th Aug 14
A History of Unlimited Money: Learn From It or Repeat Its Mistakes - 29th Aug 14
How You Can Play to Win When Market Makers Are Calling the Shots - 28th Aug 14
EU Gas Supply Is In Real And Imminent Danger - 28th Aug 14
Central Banks at the Root of Evil - 28th Aug 14
European Bond Market: Bubble of all Bubbles! - 28th Aug 14
Employers Aren’t Just Whining: The “Skills Gap” Is Real - 28th Aug 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

Now Is The Time to Buy These Oil Refiners and Coal Stocks

Companies / Resources Investing Dec 18, 2012 - 09:30 AM GMT

By: Money_Morning

Companies

Dr. Kent Moors writes: Without fail, every year there are January surprises.

They occur when investors receive a pop in selected stocks because of the way fund managers readjust their holdings to dress up their fourth quarter performance.


These improvements don't usually last very long.

In fact, most investors will see the affected stocks decline back to normal levels by mid- to late-January.

But for a few weeks, investors can earn a nice little return as the calendar begins the New Year. This hedge-fund effect will be of special interest to energy investors in 2013.

That's in stark contrast to last year when oil-related stocks were moving in one direction while natural gas stocks were moving in another. What's more, service companies were beginning to come off of their highs at this point in 2011, and King Coal was about to fall off a cliff of its own.

This time around, we have a fiscal cliff soap opera in the U.S., continuing credit concerns in Europe (although with a parallel rise in market optimism emerging on the continent), rising uncertainty again in the Middle East, and a simmering dispute between Japan and China.

In short, even ignoring the Mayans and their approaching December 21 deadline, there is no lack of concern in the market these days.

Still, there will be several beneficiaries in the energy sector as hedge fund managers make their moves over the next few weeks. This is likely to happen across several categories of companies.

In this case, investors would be wise emphasize two segments of the energy market that are currently on the rise: oil refineries and coal stocks.

In each case, the rise prompted by fund managers is not likely to last into February. However, in the case of these shares, we will see a rise resulting from market forces themselves.

That means the extra pop from a January surprise is not likely to be followed by a drop-off.

Going Long Oil Refiners and Coal Stocks
The first category are oil refineries that have a diversified regional impact and sufficient refining capacity to address both light (high octane gasoline and early processing cuts like naptha and liquid petroleum gas) and middle (diesel, high-end kerosene - actually jet fuel, and low sulfur content heating oil) distillates.

Now refineries have been performing quite well even without the help of the fund managers.

As my subscribers to Energy Advantage well know, companies like Valero Energy (NYSE: VLO) and Western Refining (NYSE: WNR) have been doing quite nicely over the past six weeks.

Both VLO and WNR have been adding strength to the EA Portfolio and are prime candidates for January surprise material.

The second category is not one I would have selected a few months ago.

But certain coal sector stocks have attracted the attention of the funds due to an upward pressure on share value this month. Two primary stocks of interest here are Peabody Energy (NYSE: BTU) and Cliffs Natural Resources (NYSE: CLF).

BTU is up 6% and CLF up 19.44% since December 3.

Each stock hit its most recent low on that date after it traded considerably above that level earlier in the quarter. December 3rd appears to have represented an initial strike point for interest from some fund managers in these shares, a move that has increased since then.

Here's How to Play It
All of the refiners and coal stocks mentioned are likely to improve in price through the first part of January.

However, by around January 15, the trajectories should change.

Refiners like VLO and WNR will continue to appreciate, albeit at perhaps slower increments than over the past month. These shares, therefore, are better candidates for longer-term holds.

When it comes to the coal stocks, the prospects are a bit different.

While the demand for metallurgical grade coal (the coal needed for the production of steel) will continue at current levels or slightly better, overall coal demand should begin to decline.

In past years, the onset of the winter months would suggest a continuing need for power and heating fuel. That may continue to be the case in certain regions of the U.S. where coal continues to be the main source of fuel. However, that is no longer the case across the board.

Now, the increasing reliance on natural gas as the fuel of choice for electricity and thermal generation will blunt the normal move to coal during the winter season.

Therefore, BTU and CLF appear to be good candidates for sale in January (when the somewhat artificial bump from the managers has worked its way through the market).

A basic suggestion on these two would be a lightening of half your position half way through January and selling the remainder by the end of the month.

An unusually cold January may prolong the upward bias for either stock a little longer, but it is not going to change the overall decline as the first quarter moves along.

Either way, the start of the New Year should be fruitful for energy investors in two sectors.

Editor's Note: If you want to know the full story on how the energy markets really work, and what stocks Kent is recommending right now as January 1 approaches, click here to see this eye-opening presentation.

Source :http://moneymorning.com/2012/12/18/now-is-the-time-to-buy-these-oil-refiners-and-coal-stocks/

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014