Wednesday, July 31, 2013

5 Best Oil Stocks To Buy Right Now

Today, I want to share a little history lesson with you. It comes from one of the worst periods of human history but makes a point about human innovation that can't be said enough -- that given enough time and capital, we're capable of some pretty remarkable things.

And the good news for investors like you and me is that we can use this universal truth to profit handsomely...

The Great Famine was among the worst episodes of starvation in recorded history.

 
Crops were devastated after an abrupt change in weather patterns in the early 1300s. Many seeds that were planted simply rotted in the soil. Livestock couldn't be fed due to lack of grain, and malnourished stock succumbed to disease.

Famine began to spread from poorer peasants to wealthier nobleman and merchants. Even King Edward II had trouble finding food for himself.

5 Best Oil Stocks To Buy Right Now: Nexen Inc.(NXY)

Nexen Inc. operates as an independent energy company worldwide. The company?s Conventional Oil and Gas segment explores for, develops, and produces crude oil and natural gas from conventional sources. This segment operates in the United Kingdom, Canada and the United States, and offshore West Africa, Colombia, and Yemen. Nexen?s Oil Sands segment develops and produces synthetic crude oil from the Athabasca oil sands in northern Alberta. The company?s Shale Gas segment explores for and produces unconventional gas from shale formations in northeastern British Columbia. Nexen Inc. was founded in 1971 and is headquartered in Calgary, Canada.

5 Best Oil Stocks To Buy Right Now: Vecta Energy Corp (VER)

Vecta Energy Corporation is engaged in the exploration for, and the acquisition, development and production of oil, natural gas and natural gas liquids. The Company has non-operated interests in three areas: the foothills of Alberta, northeast BC and the Brewster area in central Alberta. The Company has interest in the Brewster area of west central Alberta (in townships 42, 43 and 44; range 12-13, W5). These lands are prospective in the Belly River formation at depths of 1,500 to 2,000 meters, as well as deeper zones including Nordegg, Rock Creek, Ellerslie, Ostracod, Falher and Notikewin. A total of six wells have been drilled on Company acreage. The 102/01-26-043-13 W5 well is producing 350 to 400 thousand cubic feet of natural gas with liquids. The 15-11-043-13 W5 well is producing of 350 to 400 thousand cubic feet of natural gas with liquids.

Top 5 Penny Stocks To Buy For 2014: North American Energy Partners Inc. (NOA)

North American Energy Partners Inc. provides heavy construction and mining, piling, and pipeline installation services to customers in the Canadian oil sands, industrial construction, commercial and public construction, and pipeline construction markets. The company operates in three segments: Heavy Construction and Mining, Piling, and Pipeline. The Heavy Construction and Mining segment focuses on providing surface mining support services for oil sands and other natural resources. Its activities include land clearing, stripping, muskeg removal, and overburden removal to expose the mining area; the supply of labor and equipment to supplement customers� mining fleets supporting ore mining; and provision of general support services, such as road building, repair and maintenance for mine and treatment plant operations, and hauling of sand and gravel. This segment also engages in the construction related to the expansion of existing projects-site development and infrastructure ; and the provision of environmental and tailings management services. In addition, it provides industrial site construction for mega-projects; and underground utility installation services for plant, refinery, and commercial building construction. The Piling segment installs driven, drilled, and screw piles, as well as caissons and earth retention, and stabilization systems. It also designs, manufactures, and sells screw piles and pipeline anchoring systems worldwide, as well as provides tank maintenance services to the petro-chemical industry in Canada and the United States. The Pipeline segment provides small and large diameter pipeline construction and installation services, as well as equipment rental to energy and industrial clients. The company�s fleet includes approximately 900 pieces of diversified heavy construction equipment supported by approximately 750 pieces of ancillary equipment. North American Energy Partners Inc. was founded in 1953 and is headquartered i n Calgary, Canada.

5 Best Oil Stocks To Buy Right Now: Transdigm Group Incorporated(TDG)

TransDigm Group Incorporated designs, produces, and supplies engineered aircraft components for use on commercial and military aircraft principally in the United States. The company?s products include mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, pumps and valves, power conditioning devices, AC/DC electric motors and generators, NiCad batteries and chargers, engineered latching and locking devices, rods and locking devices, engineered connectors and elastomers, cockpit security components and systems, cockpit displays, aircraft audio systems, lavatory components, engineered interior surfaces, and lighting and control technology. Its customers comprise distributors of aerospace components; commercial airlines, including national and regional airlines; commercial transport and regional and business aircraft original equipment manufacturers (OEMs); various armed forces of the United States and foreign governments; defense OEMs; system suppliers; and various other industrial customers. TransDigm Group Incorporated was founded in 1993 and is based in Cleveland, Ohio.

5 Best Oil Stocks To Buy Right Now: Tesoro Petroleum Corporation(TSO)

Tesoro Corporation, together with its subsidiaries, engages in refining and marketing petroleum products in the United States. It operates in two segments, Refining and Retail. The Refining segment refines crude oil and other feed stocks into transportation fuels, such as gasoline, gasoline blendstocks, jet fuel, and diesel fuel, as well as other products, including heavy fuel oils, liquefied petroleum gas, petroleum coke, and asphalt. This segment also sells refined products in the wholesale market primarily through independent unbranded distributors; and in the bulk market primarily to independent unbranded distributors, other refining and marketing companies, utilities, railroads, airlines and marine, and industrial end-users. It owns and operates 7 refineries with a combined crude oil capacity of 665 thousand barrels per day. The Retail segment sells gasoline, diesel fuel, and convenience store items through company-operated retail stations, and third-party branded dea lers and distributors in the western United States. As of December 31, 2011, this segment had 1,175 branded retail stations under the Tesoro, Shell, and USA Gasoline brands. The company was formerly known as Tesoro Petroleum Corporation and changed its name to Tesoro Corporation in November 2004. Tesoro Corporation was founded in 1939 and is headquartered in San Antonio, Texas.

Tuesday, July 30, 2013

Is Zillow Digging Itself a Deep Hole?

With a bit of fanfare earlier this year, real estate information provider Zillow (NASDAQ: Z  ) launched a new service aimed at homeowners who are remodeling their houses. Called Digs, the service purports to give fixer-uppers an idea of what remodeling costs run in their area, which they can use as a basis for comparing bids from contractors. 

Garbage in, garbage out
It's similar to their traditional home pricing business. I get a (dreary) monthly report from Zillow telling me how much my home is worth based on sales and listing activity in my neighborhood. Because the database for such information is so dense, it (sadly) lets me see how far underwater I am on my mortgage.

Trulia (NYSE: TRLA  ) provides similar information to homebuyers, sellers, and owners, but, unlike rival ZipRealty, there are large holes in the information Zillow and Trulia provide, because real estate brokers can withhold information from them at will.

ZipRealty gets its data directly from multiple listing services that are part of its IDX database. A brokerage can only withhold data from ZipRealty if they withdraw from the IDX, which they'd be loathe to do if they want to properly serve their customers. While Zillow and Trulia also get some of their data from MLS brokers, the brokerages can hold back data from them, and ZipRealty suggests that 15% of the homes its rivals show as being for sale actually aren't even on the market. Moreover, as many as 30% of homes that were listed for sale in an MLS database were not identified by the two pricing portals as being on the market.

Dig, dug, done!
Well, there's a similar gaping hole in Zillow's Digs service. In the latest issue of Remodeling magazine, a publication targeted to contractors, it says Zillow admits that the numbers it provides for items like kitchen and bath jobs are based on figures provided by just a few dozen contractors. The magazine further alleges that the numbers those contractors came up with are derived by simply looking at photos of kitchen and bath redos, and then coming up with their estimates.

Seems like a pretty sketchy model to grow on, but there are additional problems that may leave customers facing sticker shock when they price their own projects. Digs offers estimates for just 33 metropolitan areas, and adjusts those figures using data culled from federal wage and hourly rates to come up with a customized option. That may not actually provide a valid, real-world assessment.

Punch list
Certainly a service has to start somewhere, and Zillow's Digs service could be a launching pad to grow the estimates business larger. But if the quality of the numbers is in question, and consumers find they can't rely upon them for their own particular projec,t then it could end up bringing down trust in the company as a whole.

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Right now, homebuyers use a Zillow estimate as their starting point for negotiations because, even with the alleged errors, omissions, and limitations, there's still a lot of meat. With the Digs service, however, homeowners may find that when they use an estimate as the basis for their negotiations, they'll find that they've dug themselves into a hole instead.

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Monday, July 29, 2013

Onyx Says the Price Isn't Right

Sorry, Bob Barker and Drew Carey -- the price isn't right.

That's the message from Onyx Pharmaceuticals (NASDAQ: ONXX  ) over the weekend after Amgen (NASDAQ: AMGN  ) made an unsolicited offer to buy the company. Shares in Onyx jumped a whopping 51% higher on Monday following the company's decision to spurn the Amgen offer. Here's the full story.

One bid
On Friday, Onyx hovered around $87 per share. The stock was down 13% from its 2013 highs hit in mid-May. After the market closed, though, Canada's Financial Post published a story about an attempted buyout of Onyx by Amgen for $120 per share. According to the detailed account provided in the story, Amgen sent a letter expressing its interest two weeks ago following a meeting with senior executives from both companies.

Onyx shares surged to $109 per share in after-hours trading on the report. That left Friday night and Saturday for speculation to mount about what Onyx would do. The biotech ended such speculation on Sunday when it announced that it told Amgen on Friday that it wasn't interested.

In particular, Onyx's board of directors felt that $120 per share wasn't nearly enough considering the company's prospects. Apparently, other potential suitors had already come calling. The announcement by Onyx over the weekend stated that "based upon expressions of interest received from other third parties and the recent proposal from Amgen," the board authorized its financial advisor, Centerview Partners, to get in touch with other potential acquirers.

Come on down?
This move by Onyx led to even more speculation about who the other "contestants" might be. One name mentioned frequently is Pfizer (NYSE: PFE  ) , which licensed breast cancer drug palboclib from Onyx. Pfizer received breakthrough therapy designation status for the drug from the Food and Drug Administration in April.

Pfizer's CEO, Ian Read, has said in the past that the company preferred to spend its cash on share repurchases instead of acquisitions or dividend hikes. The big pharma recently announced yet another big share buyback program of $10 billion. Read would need something of a change of heart to begin scooping up smaller companies, although that could be a smart move for Pfizer.

Bayer is another top candidate. The German pharmaceutical company and Onyx co-market kidney and liver cancer drug Nexavar. The two companies are also seeking to expand indications for the drug to thyroid cancer.

If it could get past regulators' antitrust concerns, Celgene (NASDAQ: CELG  ) would be a good fit to buy Onyx. Celgene already dominates the multiple myeloma market with Revlimid. Pomalyst, which was approved by the FDA earlier this year, competes against Onyx' Kyprolis as third-line and fourth-line treatments for the blood disease. Celgene's sales force would be able to easily merge Kyprolis into the rest of the company's product lineup.

The right price
Of course, nearly any pharmaceutical company that makes cancer drugs could be a potential acquirer for Onyx. The big question is: "What price is right?"

Deutsche Bank analyst Robyn Karnauskas says Onyx is worth $148 per share. Geoffrey Porges at Sanford C. Bernstein puts the price tag at $150 per share, but Porges says that $180 per share isn't out of the question. The Motley Fool's own Sean Williams thinks $145 per share is reasonable.

With Onyx stock trading a little over $130 per share right now, any of these prices would make for a decent profit. Despite the huge jump since Friday, the current price for Onyx shares just might still be right for investors.

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Sunday, July 28, 2013

Now More Than Ever, Size Matters for Stock Returns

Investors can't complain about the performance of the S&P 500 (SNPINDEX: ^GSPC  ) so far this year, with gains of nearly 20% since 2013 began looking especially impressive when you consider that the year still has five months to go. But when you look at some of the other S&P indexes, you'll realize that even with its outsized gains, the large-cap space hasn't given investors everything the stock market has to offer.

Where the best gains are
In fact, when you compare returns across stocks of various sizes, you'll get some surprising results:

The SPDR S&P 500 ETF (NYSEMKT: SPY  ) weighs in with 20% gains with its exposure to 500 of the largest companies in the U.S. market. When you step down to mid-cap stocks, though, you'll get even better returns, with the SPDR S&P MidCap 400 ETF (NYSEMKT: MDY  ) posting returns of 21% so far in 2013, based on the performance of 400 mid-sized companies domestically. The smallest companies in the market have done better still, as the SPDR S&P SmallCap 600 ETF (NYSEMKT: SLY  ) has given investors impressive 24% returns since Jan. 1.

Why are smaller companies outperforming the largest stocks in the market? Historically, smaller stocks have posted better long-term returns than their larger counterparts, with theoreticians pointing to the greater risk involved in small-cap stocks as justifying the higher risk premium that investors should demand in order to hold them over the long run.

But there are also a couple of reasons specific to the current environment that have supported small-cap stocks lately. One is that as merger and acquisition activity has risen, small-cap stocks have benefited disproportionately, as large companies tend to be the acquirers in such transactions and end up paying premiums over prevailing share prices in order to buy out their smaller targets. By contrast, small-cap companies that get bought out often exit with a bang, going out in a blaze of soaring-share-price glory.

The other is that the U.S. economy has been relatively healthy compared to those in the rest of the world. Increasingly, large-cap stocks tend to be more exposed to the global economy, collectively getting more of their revenue and profits from overseas and therefore suffering when sluggish conditions abroad hold back their international growth prospects. By contrast, small-cap stocks in the U.S. are often still laser-focused on growing their domestic business, and with U.S. economy conditions continuing to improve, those small caps reap more of the benefit.

What's next?
The flip side of the relationship among different-sized stocks is that during bear-market periods, large caps have often held up better than their smaller counterparts. So if you believe a correction is imminent, banking on continued small-cap outperformance could leave you disappointed. But if you think the bull market has further to run, then small caps might be able to sustain their outperformance and make their more risk-tolerant investors happy for months or even years to come.

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