Picks from Paid subscription stock hunters

pirelli

Wealth daily, Zacks, and Motely fool ... They all have their daily and weekly picks for subscription users. Please post any pick you hear about from a paid subscription service along with date it was announced.


Please don't post any from free Mail spam pennynewsletters. The type that clutter your Junk box.

I am going to post some from Stock Gumshoe. He reguarly deciphers the
adverts from motely fool and wealth daily that promise huge riches. Most of these actually work out quite good as long as you time it on the chart with when it was announced..sometimes stockgumshoe can be late, missing the oppourtunity.

pirelli

Here is stockgumshoes idea of the Month for JULY. It is from his paid subscriptions. He called it at $47 and it is dropping back again and is now at$48.

July Idea of the Month: Natural Gas Dividend Superstar

Jul 20th, 2010 | By StockGumshoe | Category: Idea of the Month


This month I want to pay my respects to the panicked, concerned and worried out there (myself included) and feature a dividend growth stock — and even better, it’s a dividend growth stock in the super-boring utility sector. This is the kind of stock you might find comfort in if the market treads water for a year or more, as many suspect.

Still awake? Good — because this stock does have an underlying business of providing natural gas to residential and business customers, but there’s also a little taste of excitement underneath in the form of some potentially very valuable acreage in the Marcellus Shale. Not exactly a “hidden” asset, but quite possibly an underappreciated one.

So if that’s not enough of a clue for you, the stock is National Fuel Gas (NFG), which is an integrated energy company that includes three main segments: a regulated utility, a pipeline and transport company (including subsidiary Empire Pipeline), and an oil and gas exploration and production company (Seneca Resources). They also have an energy marketing business, some landfill generation assets, and about 100,000 acres of timber land that they mange (and some sawmills), but even taken all together that’s a tiny slice of the pie.

The big picture scenario is that the utility, the existing pipelines, and their established oil and gas production (mostly in California) supply the relatively steady cash flow, which they’re investing in expanding their pipeline business serving the Marcellus Shale and, more importantly, their gas production from that huge shale play.

So although what we have looks on the surface like a steady eddie utility, with a dividend that has risen every year for almost 40 years and a decently competitive payout of nearly 3% at the current share price, in reality the stock, though it gets a floor because of the utility, is primarily a play on the growth of the Marcellus Shale as a growing natural gas production area, and on natural gas in general. If natural gas falls back to near $2, NFG may do reasonably well compared to some gas explorers and producers, but it will take a substantial hit — if gas gets back to $10 then they should be rolling in more cash than they know what to do with. And likewise, if accidents or environmental concerns take a big bite out of Marcellus drilling and production, NFG will suffer (as it arguably has with a bit of the shale fracking backlash).

That’s the big picture, then — why National Fuel Gas? After all, there’s a pretty long list of exploration and production companies who have significant operations in the Marcellus Shale, including Cheseapeake (CHK) and Range Resources (RRC); and there are also plenty of solid utilities who have grown their dividends for decades, including Con Ed and several others, some of which also have exploration and production arms. For me, the argument for NFG is that they’ve been able to manage the whole picture very effectively, consistently increasing the dividend and allowing the diversified business lines to steady the ship even during a decade of extraordinarily tumultuous economic conditions and wildly volatile commodity prices… and there’s that potential for significant growth as they edge close to becoming a major gas producer in Pennsylvania and New York.

And while the dividend and the transport and utilities businesses and California oil and gas production should provide a backstop for the shares in the neighborhood of $30-35 even if natural gas prices take another haircut, I think the growth potential for NFG if natural gas prices do remain steady or rise is underappreciated, thanks in part to the very low cost of their Marcellus Shale landholdings. Many of these stocks are trading below their highs not just because of fears of lower gas prices (which are due both to economic weakness and increased shale production in the US), but also because of some generally bad news from the Marcellus — groundwater concerns, particularly in Eastern PA near the Delaware River, and general environmental worries about hydro fracturing for shale gas, including worries about what chemicals are being used, the amount of water needed, etc. … and even a blowout at one of the wells that EOG operates for a joint venture with NFG, have investors feeling a little trepidation.

My feeling is that this trepidation, and the generally low prices of several of these stocks (I’d add CHK and RRC to the list of “relatively cheap” producers, and Range Resources is getting some credit for being ahead of the pack on the environmental issues regarding frac chemicals), give us a good opportunity for exposure to a conveniently located monster gas field at a low price. Shale gas fields like the Marcellus have certainly pressured natural gas prices, given the significant new production that’s been coming online for the last couple years, but it’s also worth noting that the weak economy played a major role in declining gas prices as well, and probably caused NFG’s earnings to be a bit weaker than might have otherwise been expected — their core utility service area, after all, is in the old industrial heartland of Western NY and Northwestern PA, and there’s a reason why you haven’t been reading headlines about an economic boom in Buffalo and Erie … but still, they have almost three quarters of a million utility customers sending in checks every month, so that’s nothing to sneeze at.

But even though I feel comfortable with saying that I think natural gas will be an increasingly important part of our national energy consumption, and that prices are more likely to be higher than lower five years from now, I’m not crazy about being just exposed to production from a fairly aggressive shale gas player like Chesapeake. In this environment, with the potential for a weak economy and weak gas prices continuing for a considerable period of time, I feel much better about a company that’s managed for a solid and growing dividend and that has a low cost profile for its E&P division.

The stock is not rock-bottom cheap compared to other utilities or other exploration and production companies, but they started out with a prime advantage: They’ve been operating in their core region for over a hundred years, so they have great access to pipeline right of ways, distribution, local government relationships, and, of course, the cheap land — mostly fee-based, with no royalties — that they can drill. The price seems fair to me given the potential of their large landholdings and their prime distribution and transportation footprint in the Marcellus region.

National Fuel Gas does not have massive proven reserves just yet, they’re really just starting their Marcellus adventure, which got underway as they effectively took an advanced class in shale gas by forming a joint venture with EOG Resources, into which both put some acreage and which is operated by EOG — following that they started more drilling on their own, and they continue to try to suss out just how much gas they’ve got underfoot.

Analysts have a bit of a wishy washy consensus on NFG — most of them rate the stock a “hold,” which given the historical paucity of “sell” recommendations is quite negative, but since the latest earnings release they’ve also been bumping up earnings estimates for this year and the next couple years. Estimates now are that they’ll close out this year (they’re in their fourth quarter now, so this is fairly solid) with earnings of $2.65, and that this will grow to $2.85 next year and about $3.19 in 2012. So it’s decent earnings growth in the neighborhood of 10%, and the current year’s PE ratio is 17. The current annual expected dividend is $1.38, which will probably climb by 2-4% per year if past history is any guide, so their dividend coverage ratio (the percentage of their earnings that they pay out to shareholders as dividends) seems quite reasonable at near 50% — it’s not unusual to see utilities pay out 75% or more of their earnings, since they generally have relatively low capital investment needs, but NFG is clearly conserving a decent portion of their earnings power to funnel into their exploration and production activities for future growth.

The company does offer guidance as well, and the analysts are right in line with that — the guidance for this fiscal year, which hasn’t been updated for a while, was for $2.45-2.70 in earnings, with a $1 move in natural gas prices in either direction (from their $5 assumption) moving that number by a nickel (similarly, they estimate that a $5 change in the barrel price of oil would move their earnings three cents, in either direction).

Their exploration and production budget this year is focused on two areas: the JV with EOG; and 20-30 wells that they’re drilling in Tioga County, which makes sense because it’s their landholding that is closest to what seem to be some of the major identified target areas in the prime belt of Marcellus land (a lot of their land is to the North and West of the most concentrated production, so it hasn’t been fleshed out as much). They also have neatly sidestepped at least part of the water concerns, because they’ve contracted to use the polluted runoff from an old coal mine for all of their fracking needs in the Tioga area, enough water for about 90 wells nearby once they’ve built the water pipelines, at a rate of three “fracks” per month — that doesn’t necessarily help with worries about what chemicals might leach into the groundwater, but they may well be able to say that they’re actually cleaning up an environmental mess by using this water.

Current production for this year is expected to close out somewhere in the neighborhood of 50 Bcfe, with about 40% from California and the rest split between the Gulf of Mexico, the Upper Devonian (Appalachia), and the Marcellus — of that, proved reserves are about half oil and half gas, with production skewed a little bit to gas and revenue (thanks to the disconnect between oil and gas prices) skewed about 60/40 to oil. Capital expenditures have been relatively minor in recent years, and roughly evenly divided among their three concentrations of conventional resources — but that changes this year, and gets dramatic next year with CapEx for their other areas being slashed and the CapEx for Marcellus equaling more than twice what their entire capital investment program was in 2008.

Likewise, most of their reserves are in California and the Devonian — as long as you’re talking about proved reserves, as of last September they reported 342 Bcfe of proved reserves in their California properties, and just 21 Bcfe in the Marcellus, but the probable and possible reserves and the “resource potential” is all in the Marcellus and the Devonian (mostly the former, with an estimate of 4-8 Tcfe (that’s Trillion). So that’s where the potential growth is

NFG also has some relatively buyable bonds outstanding as well, and to give you an idea of their perceived financial stability the three year bonds trade at a premium with an effective coupon yield of about 4.25% — not bad, but if the dividend goes up by a few percentage points per year your effective yield could approach that level with the common stock not long after the bond’s maturity date (and, of course, give you some potential for capital gains, and some inflation protection in the form of regulated utility and pipeline fees and, presuming that inflation hits nat gas prices as well, increased asset value).

The stock price is well off its highs, it got into the mid-$50s earlier this year, but it’s also far above where the stock collapsed to during the financial crisis, when you could have picked up shares for under $30. Right now you can buy the stock for about $47.

Of course, if we enter a truly deflationary environment things will be tough for most stocks, and that will probably also be true for NFG — particularly if the deflation and a weak economy continue to keep a lid on natural gas prices … but all else being equal, their basic utility business provides some protection there. And as long as you’re looking at relatively risk-averse stocks like utilities and considering the possible impact of environmental worries on Marcellus drilling in the future, I think it’s also worth thinking about the fact that diversified utilities and electricity generators have some possible headwinds coming as well, particularly in the form of carbon regulation, so pretty much everyone’s got a bugaboo somewhere (the only “utility” I currently own is Verizon, which instead of environmental concerns faces a competitive pricing environment and the challenges of a wasting asset base as fixed-line telephone subscriptions erode).

And while it might arguably make some sense for National Fuel Gas to suspend dividend increases so they could invest more in their Marcellus exploration without adding debt (they have about $200 million in bonds coming due next year, and need to add another $250 million in debt in 2011 for expanded drilling), it seems unlikely to happen — once you’ve increased your dividend every year for 39 years in a row, woe betide the CEO who suggests to the board that they skip a year … and with rates this low, it’s hard to argue against borrowing money. So NFG will probably add substantially to their debt load over the next several years to fund additional drilling in the Marcellus, but their balance sheet looks just fine to me and should be able to take it, and they should have no trouble continuing their shareholder-friendly dividend policy, assuming they choose to do so.

pirelli

Enormous “Oil Kitchen” Profits Offshore Namibia
This is one of those teases that clearly jumps out at people — when a relatively high profile newsletter teases a new and undervalued oil reservoir held by a tiny penny stock, folks get interested … or at least, that’s what I conclude from the vast number of emails I’ve received in just the last 12 hours since this ad started rolling

This is the Stock Pick that is teased in the advertisement below. It came out on the 30th of JULY...Please read the comment at the very end of post by Mike.


UNIVERSAL PWR CORP (Public, PINK:UPWRF

UPWRF

ADVERTISMENT ( subscription cost $1500 annum)

The moratorium on drilling in the Gulf of Mexico will only accelerate the “internationalization” of oil exploration. With the moratorium, deep-water drilling rigs will leave the Gulf. The newest, most modern, most capable rigs (and the “safest,” if you REALLY care about safety) will be the first to go. They’re in demand from firms like Petrobras and Statoil to drill in places like Angola and Namibia…. the moratorium will create new urgency to explore and develop deepwater projects elsewhere in the world.

“I recently told the subscribers of Energy and Scarcity Investor about a small Canadian oil developer with BIG acreage offshore Namibia. Out of deference to my Energy and Scarcity subscribers, I can’t divulge the name of Company “X”. But I’ll share a few details about it, just to give you a flavor of the terrific investment opportunities that are now emerging.

“Company ‘X’ holds astonishingly large acreage in oil prospective waters in the southerly regions of Namibia’s offshore. We’re talking about HUGE amounts of prospective oil resource – in the billions of barrels. Yes, billions.

“How good is the acreage? Well, let’s look at the neighbors. You’re known by the company you keep. Petrobras holds the Namibian blocks to the north. Shell holds the South African blocks to the south. Company ‘X’s’ acreage also surrounds a multi-trillion cubic foot natural gas discovery. This natural gas field also contains oil. The oil comes from an ‘oil kitchen’ that the seismic indicates is deep, and to the west, of the gas field. And that’s EXACTLY where Company ‘X’ holds prime acreage.

“What else? Well, if you do the plate tectonic reconstructions, you can see that Namibia used to be right next to what’s now Brazil, in South America. And what part of Brazil did Namibia used to be close to? Why, the pre-salt areas off Brazil which hold oil resources in the range of 100 to 200 billion barrels – although the Brazilians hate it when people like me use such large numbers. ‘We really have not found all that oil, not officially,’ one Brazilian told me. No, not yet. But it’s just a matter of time.

“To be perfectly accurate, most of the Namibian offshore doesn’t have the miles-thick salt layers that we see in Brazil. But that’s just an issue of the ’seal’ over the oil-bearing structures. The Namibian waters, instead, have miles-thick shale formations acting as a seal over the oil-bearing strictures.

“In many respects, the shale cap makes for better seismic and better drilling conditions. Shale tends to be more transparent to seismic energy, which makes for better resolution of the deep structures. That makes for more accurate drill-hole placement.

“Plus, those Brazilian salt-beds are a pain, as the Halliburton people have explained to me. When you drill in deep, thick salt the salt tends to move in a “plastic” manner. It squeezes the hole thinner. Sometimes, the salt-squeeze even sort of “grabs” the drill pipe. Bottom line is that it makes for tricky down-hole operations.

“Despite these challenges, exploration activity is heating up on both sides of the southern Atlantic Ocean. On the eastern side, the ‘Namibian Oil Rush’ is still in the early stages. Opportunity abounds.”

Universal Power Corp. is an Oil and Gas company focused on building a portfolio of highly prospective and under-explored exploration and development targets in Namibia, Africa. Management follows the Project Generator business model, using joint ventures to fund exploration to reduce risk and minimize shareholder dilution. The management team and directors have established an excellent relationship with the Namibian Government, and their local partners over 8 years of in-country development. To-date Management has built a portfolio of over 52,000 gross square kilometers of highly prospective hydrocarbon concessions.”

RESPONSE to Stockgumshoe

Travis -

I’ve been an Energy & Scarcity subscriber for a little over a year and am up over 100% on Byron King’s suggestions. He is one of two analysts to whomI pay attention. The other is his colleague, Patrick Cox (Breakthrough Technology Research). Their research has paid for me many times over the cost of it.

King may hate me for this, but I can confirm your guess. However, I’ll not say more, except that your potential reserve numbers are wrong by a factor of 1,000 – in the appetizing direction – according to an authority well known to, and highly respected by, me, a former Chairman of the Federal Energy Regulatory Commission (1981-1983). And this is not the only juicy pick in Byron’s bunch. I admit that I may have been lucky in the timing of my purchases, since my results out perform his reported portfolio substantially. I have never met either King or Cox, but I became – despite initial skepticism – a lifetime subscriber to their research for the simple reason that it pays. My substantial investment in UPWRF is a long time hold, and I continue to buy on dips – another of which I hope to see soon. (Incidentally, I bought Arena Pharmaceuticals on Cox’s recommendation, am up 100%, and looking for more.)

Best, Mike

Cute Hoor

Not sure if this is hat you're thinking of pirelli, but I got this from The Motley Fool on 22nd July, hope it's OK to post this and I'm not (knowingly) spamming.



It's hard to remember a time when these companies were trading on such miserly ratings.

The best opportunity in a decade?

I know, the headline sounds outrageous. Considering that China's growth is slowing, the UK is in full austerity mode, the US recovery is stalling, and that the EU is constantly under financial fire, there doesn't seem to be a plethora of opportunities out there.

After a spectacular rally in 2009, the FTSE 100 has dropped by about 5% so far this year. Almost no sector or asset class has been spared. But trust me: Keep reading, and I'll give you five shares trading at dirt-cheap prices.
Collateral damage

One very important aspect of the stock market's decline this year is the collateral damage. Certain events can shake the foundation of an entire sector, as we've seen with the BP (LSE: BP) oil disaster.

Because of a possible drilling moratorium in the Gulf Of Mexico and the expectation that oil exploration in general will be more heavily regulated, many oil shares have been dragged down by the market.

For instance, over the past 3 months, whilst BP shares have slumped 40%, giants like Royal Dutch Shell (LSE: RDSB) and BG Group (LSE: BG) have also fallen 10% and 8% respectively. Even the mighty Tullow Oil (LSE: TLW) -- mighty because it's the highest-rated company in the FTSE 100 index, and over the past 5 years its share price has soared 500% -- has taken a 19% haircut in the same time period. Is nothing sacred?

Those share price movements might seem about right given the enormity of the Gulf spill, but when you consider Shell was already incredibly cheap before this whole disaster, and BG Group's reserves continue to expand at an impressive rate, you can't help but think they've simply been thrown out with the BP bath water.
Look no further than the titans

Sift long enough through the carnage of battered shares, though, and you'll find one asset class that is trading at ridiculously low valuations. Look no further than your average large-cap blue chip.

Currently, the FTSE 100 trades at 13 times earnings and a dividend yield of 3.3%. On face value, and in the midst of the aforementioned austerity drive, those numbers may look about right.

But when you compare them to base interest rates of 0.5%, and consider a P/E of 13 is the equivalent of a 7.7% earnings yield, they don't look too shabby.

And when you also consider the average P/E of the FTSE is elevated by the likes of Tullow Oil (forecast P/E 51), ARM Holdings (LSE: ARM) (34) and even British Airways (LSE: BAY) (31), you can see how some blue chip companies might be priced as if they'll never, ever grow again.

Below, I've taken a look at the five largest UK shares by market cap.
Company Market Cap Forward
P/E Ratio Forward
Div Yield
Royal Dutch Shell £110b 7.8 6.5%
HSBC Holdings (LSE: HSBA) £110b 10.0 4.1%
Vodafone Group (LSE: VOD) £76b 9.7 6.3%
BP £73b 5.4 7.0%
GlaxoSmithKline (LSE: GSK) £62b 9.7 5.7%

Sure, there are valid reasons why these shares may be trading on such low ratings, BP being most obvious example, with Shell being tarred with the same oily brush.

HSBC is a global bank, and with the last financial crisis still fresh in our memories, it's easy to see why investors are cautious about their future prospects. Vodafone has growth challenges as it struggles with a flat to declining UK market. GlaxoSmithKline has been crimped by litigation issues and forthcoming patent expiries.
Miserly Ratings

But just take a look at those forecast P/Es, the highest being just 10. With the possible exception of 2002, I can't remember a time when blue chips were trading on such miserly ratings for an extended period of time. And remember, these are the five largest companies in the country, and by definition, the five most successful companies in the country.

What gives?

I can only put it down to boredom and the inherent short-termism of traders. No-one is going to make an instant fortune buying and holding these five companies. But unless you're employed by the High-Beta Ultra-Volatile Hedge Fund, and your preferred investing time frame is counted in nano-seconds, longer term investors can enjoy the dividends whilst sitting back and waiting for the almost inevitable re-rating of the shares.
The Foolish bottom line

Nothing is guaranteed in the world of investing. How would you ever have predicted the current BP crisis? Will the same fate befall Shell in the years ahead? Will Glaxo be subject to a string of multi-billion pound legal claims regarding its blockbuster drugs? Will HSBC discover a giant black hole in its Hong Kong operations?

But if you look back at history, data will show that during downturns you can often find shares that are trading at wildly low valuations. Sometimes it's small caps, as they tend to be pretty volatile; other times it is a specific sector that has gotten hit for good reason (like oil shares right now).

However, it's pretty rare that massive companies with huge economic moats and a history of outperformance -- like the ones listed above -- are trading at such appealing prices.

pirelli

pirelli wrote: »

This is the Stock Pick that is teased in the advertisement below. It came out on the 30th of JULY....


UNIVERSAL PWR CORP (Public, PINK:UPWRF

UPWRF

pirelli

Cute Hoor wrote: »

Not sure if this is hat you're thinking of pirelli, but I got this from The Motley Fool on 22nd July, hope it's OK to post this and I'm not (knowingly) spamming.



HSBC is a global bank, and with the last financial crisis still fresh in our memories, it's easy to see why investors are cautious about their future prospects.

HSBC Holdings plc (ADR) (Public, NYSE:HBC)

53.74
+2.66 (5.21%)
:):):)