INVESTOREXPO
Editorial: Dan Deadlock (wwi) / Christopher Gulka, CA CFA
Publisher: Webmasters Worldwide Inc. (wwi) - www.investorexpo.com www.stockcult.com
TABLE OF CONTENTS
1. Oil & Gas Stocks - CBS Marketwatch features the Canadian sector for strong
growth
2. Integrated Production - our oil/gas service stock attempts aggressive takeover
3. Canadian Corporate Review - updates now available throughout the day
On Saturday OPEC agreed to cut almost 1 million barrels of production from the
system, or 4% of targeted output. Bad news for consumers but good news for the
industry. As the balance sheets of these companies continue to strengthen dramatically
we are presented with some decent opportunities. Many stocks in this sector are
trading at 52wk highs but the valuations are no where near what we saw in the
mid 90's when stocks traded at 2 to 3 times these value. As technology continues
the meltdown one has to wonder what (if any) may be the next hot sector. The
oil & gas stocks definitely have strong fundamentals and room for growth but
whether we'll see a speculative phase is anyone's guess. Cash is king in this
market but any good junior oil & gas stocks you can find trading at reasonable
cashflow multiples (approx. 2 times annualized cashflow) remain good bets.
cbs.marketwatch.com (excerpt
below)
"As many investors grope for a lifeline amid a morass of gutted chipmakers, computer
companies, software developers, networking behemoths and Icarus-like Internet
shares, tech stock analysts offer little more than excuses and a shrug of the
shoulders. Many U.S.-based investment advisers and commentators are also eschewing
stock picks in favor of money market funds, government bonds and cash."
"Yet just north of the world's largest economy, Canadian petroleum companies,
many of which trade on U.S. markets, generate healthy stock gains, propelled
by booming commodity prices, a torrent of mergers and acquisitions and insatiable
U.S. energy demand."
"Canada's oil and gas stocks have quietly outpaced the world's benchmark stock
indexes this year and last, and have assumed - for some prescient investors -
the comforting mantle of safe haven investments with punch. What's more, these
stocks are likely to continue their advance in the quarters to come.
2. Integrated Production (IPL:TSE $2.80)
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Coverage Initiated: Dec 20/00 $2.35 www.ipsl.ca
Still only moderate gains here but I believe the real value for this oil & gas
service stock lies somewhere in the $5 to $7 range. Integrated has made close
to 10 friendly acquisitions within this industry over the past year but last
week announced their first attempt at a hostile takeover. The target is a service
company on the Cdnx called Delaney Energy Services (dly) at a price of $1.05
which appears very fair. IPL raised $30 million at $2.60 several months ago with
a Texas fund and is generating strong cashflow as their equipment runs at capacity.
This cash position and borrowing ability enables IPL to get a bit more aggressive
and demonstrate to shareholders they are prepared to build value through internal
growth and "aggressive" external growth if need be.
Last year we had 2 of our other oil service stocks we followed bought out and
over time I believe IPL will end up in the same situation. As we expect energy
prices to remain strong, we believe the value behind IPL's stock is substantially
higher than where it currently trades and represents strong value at these levels
for anyone with a mid to long term investment horizon.
3. Canadian Corporate Review
--------------------------------
stockcult.com
Thursday I started updating this section of the stockcult website. I review all
the news releases issued by Canadian companies during the day and post a brief
summary (updated roughly every hour) of any that may lead to short term trade
opportunities or point us in the direction of a fundamentally strong company
that may present good value with further research. I'm sticking with small to
mid caps though. Friday probably saw 75 releases issued and only 5 that I felt
were worth following up on and were posted to the site.
We started following Liberty Oil/Gas (lbr:cdnx) on Feb 4th at $0.95 and are currently
up approx. 40% on it. We'll start to see more companies in this sector issuing
news soon and I'll keep an eye out for any decent ones trading at good multiples.
There were a couple on Friday that may be worth looking into so I'll leave them
up until late Sunday night.
______________________________________________________________________________
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