Best of the Week
Most Popular
1.UK General Election 2015 - Forecasting Seats for SNP, LIb-Dems, UKIP and Others - Nadeem_Walayat
2.UK General Election 2015 Seats Forecast - Who Will Win? - - Nadeem_Walayat
3.Gold Price Downtrend Looks Set to Continue - Clive_Maund
4.Commodity Prices Set To Plunge Below 2008 Lows - Austin_Galt
5.New Greece Drachma Revealed Amid Bank Runs - Greeks Buy Gold Sovereigns - GoldCore
6.Gold and Silver Stocks or General Stock Market Indices? - Rambus_Chartology
7.“Forgive Us Our Debts” – Only Way To Prevent Economic Meltdown - GoldCore
8.UK House Prices Trend 2015 and the May General Election - Nadeem_Walayat
9.12 Reasons Why Barry Ritholtz and Many UK Experts Are Mistaken On Gold - GoldCore
10.Recession is On The Way; Beat The Stock Market Crowd, Panic Now! - Mike_Shedlock
Last 5 days
UK Election 2015 - Cameron Housing Bribe - 200,000 Discounted Homes for 400,000 Voters - 6th Mar 15
The Anthropology of Finance - 6th Mar 15
Portfolios, Insurance, and Gold - 6th Mar 15
Gold and Silver Justice For Some - Currency Wars - ECB Deposit Rates To -3% - 5th Mar 15
How to Play the Big Broker Stocks When Interest Rates Rise - 5th Mar 15
Here's What Stock Market Bulls Might Be Overlooking - 5th Mar 15
U.S. Soaring Crude Oil Stocks - Cushing and Gulf Coast Storage Filling Up Fast - 5th Mar 15
Japan's Intelligence Reform Inches Forward - 5th Mar 15
Gold Miner Index Breadth Oscillator, Forward Reckoning® - 5th Mar 15
Gold Price Set To Plunge Below $600 - 5th Mar 15
UK General Election Forecast 2015 - Immigration Crisis, SNP Insurgency and Housing Mini-Boom - 5th Mar 15
Spock, Debt and the Kingdom of Denmark - 5th Mar 15
The Psychology of a Sideways Stock Market Trend - 5th Mar 15
Freedom from America - Getting Out Of Dodge - 5th Mar 15
What Top Hedge Fund Managers Really Think About Gold - 4th Mar 15
U.S. Dollar Strategic Backfire On U.S. Government Policy - 4th Mar 15
Canada’s Central Banks Orders End to ‘Spocking’ Of Canadian Dollar - Defacing Debasing Currencies - 4th Mar 15
Chicago's Only Possible Salvation: A Detroit-Like Bankruptcy - 4th Mar 15
Gold Price and Mining Stocks Decline Together - 3rd Mar 15
Financial Slaughter - The Silence of the Lambs - 3rd Mar 15
Bondholders “Bailed In” In Austria – New Banking Crisis? - 3rd Mar 15
How to Profit from the Coming Oil Price Crunch - 3rd Mar 15
Is Japan Zimbabwe? Could Japan go Hyperinflation? - 3rd Mar 15
Bill Gross Says Fed May Raise Rates 25 Basis Points in June - 3rd Mar 15
The Secret Behind My Hedge Fund Trade on U.S. Housing Market - 3rd Mar 15
BLS CPI Lie - How's That Dsflation Working Out for You? - 3rd Mar 15
Tesla Bonfire of the Money Printers’ Vanities - 3rd Mar 15
Gold Demand in UK, Europe and U.S. – Reuters Interview GoldCore - 2nd Mar 15
Watch the Skies... for Investor Profits - 2nd Mar 15
How Investors Can Identify the Best Small-Cap Stocks - 2nd Mar 15
Gold and Silver - What If the Precious Metal Stocks Bulls are Back - 2nd Mar 15
Students Getting a PhD in Subprime Debt - U.S. Debt Breaking Bad Part 3 - 2nd Mar 15
The Stock Market is in The Process of Major Top! - 2nd Mar 15
Stock Market Weakening Trend - 2nd Mar 15
Gold Price Glimmer of Hope - 1st Mar 15
Stock Markets Are Riding High on Thin Air - 1st Mar 15
Varoufakis vs. the Troika - Showdown in Athens - 1st Mar 15
Subprime Rising - U.S. Debt Breaking Bad Part 2 - 1st Mar 15
Gold CoT Improving, But ... - 1st Mar 15
UK General Election 2015 Seats Forecast - Who Will Win? - 28th Feb 15
UK General Election 2015 - Forecasting Seats for SNP, LIb-Dems, UKIP and Others - 28th Feb 15
Stocks Bull Market Continues - 28th Feb 15
U.S. Debt Breaking Bad - 28th Feb 15
NATO Frankenstein - When Centralization Scales Beyond Our Control - 28th Feb 15
Gold And Silver Insanity Prevails; Precious Metals Without Direction - 28th Feb 15
Fed Raising U.S. Interest Rates - Shovelin’ Schmitt Against the Tide - 28th Feb 15
Don't Let This Stock Market Myth Cost You Your Gains - 28th Feb 15
Recession is On The Way; Beat The Stock Market Crowd, Panic Now! - 28th Feb 15
Stock Market Indexes Creeping Towards the Edge - 28th Feb 15
GGD Going for Mexican Gold - 27th Feb 15
Foreign Real Estate Is the New Swiss Bank Account - 27th Feb 15
10 Reasons Washington Has War Fever - 27th Feb 15
Gold and the Euro Tragedy, Iraq 3.0, Ukraine Conflict Three Ring Circus - 27th Feb 15
Deepak Chopra - New Age Genius or Bullshit Expert? - Video - 27th Feb 15 - Videos
New Greece Drachma Revealed Amid Bank Runs - Greeks Buy Gold Sovereigns - 27th Feb 15
Will Month Long Stocks Rally Continue? - 27th Feb 15
The Only Public Hedge Fund You Should Own - 27th Feb 15
UK House Prices Trend 2015 and the May General Election - 27th Feb 15
Why America is Ungovernable - The Republicans’ Civil War - 27th Feb 15
Gold vs Gold Stocks: Bullish Anomaly Developing? - 27th Feb 15
I Heart Capitalism, Nasdaq Stocks, Then And Now - 27th Feb 15
The Fed’s History of Assassination - 27th Feb 15 i
Gold Bull Market Forecast - Money Will Rotate Into These Dead Investments - 27th Feb 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The State of the Global Markets 2015

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

© 2005-2015 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