‘Evil Energy’ Evaluation
|Written by GSCR Staff|
|Thursday, 26 February 2015 06:47|
On Monday, fossil fuels were dealt a big blow by the POTUS, as he vetoed the Keystone XL pipeline bill, just as he promised he would.
Mr. Obama appears to be content on doubling down on all of his agenda items, including ending oil, gas, and coal production in the U.S., just months after being dealt the second mid-term ‘shellacking’ of his presidency. This move is even more dumbfounding when you consider that even conservative estimates were for 40,000 jobs gained and the State Department deemed that it would have no long term impact environmentally. Not sure the global warming argument is going to win many folks over in what has been the coldest February in 100 years in a majority of the country.
Why is this important? The chart below illustrates the YTD performance of two of our Market Monitor picks from January 9th this year, CSI Compressco, LP (NASDAQ – CCLP - $16.40) and Cypress Energy Partners, LP (NYSE – CELP - $19.16) compared to iShares Russell 2000 ETF (NYSE – IWM - $122.80).
CCLP and CELP Charts YTD vs. IWM
CCLP is up nearly 23% since our feature and CELP is up over 43%. Many investors have piled into these stocks looking to buy cheap oil and gas per our original thesis. We believe this political setback will not impact either of these stocks significantly. Yesterday was basically a wash as CCLP was up just over 1% and CELP was down just 0.35%. Both of these companies provide goods and services that are not tied directly to the pipeline. We called for $20 this year for both and are sticking to it.It should be noted thatCELP is nearing $20 and not getting greedy maybe the attitude to take once this occurs by taking profits or using options to lock in gains.
Another over politicized industry from the green folks like the POTUS is coal. One of our favorites continues to get slaughtered because of this atmosphere.Peabody Energy Corporation (NYSE – BTU - $7.93)is down over 53% over the last year. This stock was at $88 before the Great Recession crash but amazingly enough, the EMA technical analysis is very bullish here. This maybe more a bet on who will win the 2016 presidential election at this point. Waiting until the stock moves belowr $5 to buy could present a once in a lifetime opportunity.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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