| Sam_O: IMO, $40/bbl oil (even if it does occur) will not last. If the price remained that high, it would induce a recession, and quickly (within 3 months). Additionally, at that price, marginal oil production will come on line. The more likely scenario is that barring a supply interruption (i.e., Saddam going postal on the Kuwaitis again, or shutting off his own production to spite "The Great Satan"), Oil will settle in the $28-$33/bbl range for the next 6-9 months. At that level, most of the E&P companies and the oil service companies will do quite well. Unfortunately, they are also PRICED to do quite well at present. I'd wait for a pullback in the OSX to under 125 or so, then start looking at companies like MAVK, NSS, and KEG, which are either drilling equipment or drilling service companies. If the expected pullback does not occur, buy MAVK on a breakout above 30, and NSS on a breakout above 19 if accompanied by > 150% average daily volume. Another option is to buy the natural gas producers, as they will continue to benefit from high gas prices as well as neglect/abuse of the pipeline infrastructure, courtesy of the Democratic administration. Keep in mind that these companies are fully priced, so I'd wait for pullbacks to buy. My two favorites here are AOG and MND, both have large reserves and are extremely efficient producers, and will benefit from the energy boom for 2-3 years to come, if prices stay above $3. Keep in mind that most U.S. electrical generation (where demand is surging) now comes from NG, and this will continue for the forseeable future. |
