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September 19, 2005
Rita meet Sam Houston; Sam meet Rita, Mon., Sept. 19, 2005, 6:09 AM
Because Rita is a newborn and Texas has been around for a hundred and sixty years; it is proper etiquette to first introduce her to the elderly, as a matter of respect for the latter.
But wait; in about seven days, little Rita might have grown to be a heck of a girl, say size 3 or 4 or even 5 maybe? And the part of Texas that Rita meets, in fact, just may be Sam Houston's Galveston port and his offshore oilrigs, the heart of the crown jewels" of Texas, as it were.
Could it be that mighty Texas can't handle baby Rita?
You do know of course that Rita is possibly Katrina's little sister " yes, that Katrina, the whirlwind I called Katrina-Petrina when she was passing by the Bahamas, on a northwest heading that should have taken her nowhere near the Big Easy, or the oil rigs and refineries close to New Orleans. Like a woman, she changed her mind, and tracked south, then west. And she soon turned from the tiny size of Rita today into a monster Category 5 hurricane, which then hit the U.S. Gulf States with enough force to literally destroy an area the size of Great Britain.
When a single weather system can displace 1.5 million people, cause 1,000 deaths and cost $200 billion dollars to recover from, it is THE NEXT ONE that puts people on notice.
So this time, it could be that Rita, who today seems to be on the right path to be The Next One, meets Sam Houston in the worst of places, next weekend. And, should Rita stay her present course, I'm predicting that she will be given a degree of respect not afforded Katrina prior to her arrival three weeks ago.
Please check out the interactive file at the National Hurricane Center of NOAA:
So how do we traders welcome the arrival of Rita?
Well, there are seven groups in my North American oil & gas market monitor. Other than maybe gold, why would you look elsewhere?
Oil & Gas Drilling & Exploration: GSF NBR NE PDS RIG
Oil & Gas Equipment & Services: BHI BJS HAL RDC
Integrated Oil & Gas "USA: AHC CVX COP XOM
Integrated Oil & Gas "Canada: IMO PCZ SU
Oil & Gas Exploration & Production "USA: APC APA BR DVN EOG KMG OXY SUN UCL VLO XTO
Oil & Gas Exploration & Production "Canada: CNQ ECA NXY TLM
Oil & Gas Refining & Marketing: ASH MRO
While I don't recommend stocks, I do have opinions: My favorites among these 33 are three from Canada (IMO SU and ECA) and seven from the U.S. (CVX COP XOM APA DVN VLO and XTO).
According to Fortune, the five oil & gas companies (from this list of the U.S. companies) that are growing the fastest overall are:
#1- VLO
EPS growth: 66%
Revenue growth: 52%
Total Return: 63%
#2- DVN
EPS growth: 152%
Revenue growth: 51%
Total Return: 28%
#3- COP
EPS growth: 70%
Revenue growth: 70%
Total Return: 28%
#4- XTO
EPS growth: 26%
Revenue growth: 40%
Total Return: 55%
#5- APA
EPS growth: 46%
Revenue growth: 34%
Total Return: 34%
These U.S. companies are all in the S&P 500, and the Canadian stocks are all among the largest of large cap stocks in that country.
As I'm out of words for now, I'll leave it to you to check out all the names. And because Katrina gave quite a booster shot to these stocks recently, please check out the charts. It could be that Rita prefers to tangle with Mexico, and she might tire before she gets herself across the Gulf. In that scenario, these oils might relax.
One more thing: On Tuesday Alan Greenspan's FOMC is going to raise rates, or maybe not. We don't know yet. If the Fed does tighten, there might be a small pullback in the oils and golds, before they subsequently move to new record high levels, as I see it.
But if the FOMC pulls its punch on Tuesday, then I expect oils and golds to move higher immediately. And if Rita hits anywhere north of Brownsville, I'm taking her in a knockout of Sam Houston at the Friday night fights.
It's a golden bet.
Here are the links to interactive charts:
Oil & Gas Drilling & Exploration
Oil & Gas Equipment & Services
Oil & Gas Exploration & Production -USA
Oil & Gas Exploration & Production -Canada
Oil & Gas Exploration & Production -International
Oil & Gas Refining & Marketing
Posted by Posted by Bill Cara on September 19, 2005 06:06:40 AM | Category: 10 Energy