The short term investing stock picks blog

Word from the Goldman Sachs energy conference last week is that drilling remains economical, driven by stronger natural gas prices.  Looking at the sector as a whole, however, I remain wildly bullish on Transocean Inc (NYSE: RIG) the company that recently merged with Global SantaFe (NYSE: GSF).  The recent pull back in shares offers a spectacular buying opportunity for the contract driller.  The price is nearly as low as the company traded after it announced a earnings surprise of nearly 61% in October before running to nearly $150.  The forward earnings estimates remain pretty solid, but even if they slipped the stock would be a strong buy at $125.  Mean estimates put short term growth at 37.5% and long term growth at 24.7%, not bad for a stock trading at 15.3 and 9.5 price-to-earnings ratios.  Not too bad considering a its peers in the Oil Services sector are more expensive, over 25% more expensive for forward earnings.  Even the entire Energy sector, which tends to trade at a lower multiple than the Services providers, are around 17% more expensive than RIG on a forward P/E basis.  Its PEG ratio is 0.6, compared to 0.7 for the Services companies and 1.6 for Energy.

If you are interested in the Nat Gas drilling play, consider Patterson-UTI energy (NASDAQ: PTEN) and Helmerich and Payne, Inc. (NYSE: HP).  I have done no due diligence on these companies.

Disclaimer: I do not own shares of any of the above companies.  I am considering moving capital from cash to purchase Transocean based on technicals.  The Stochastics are bullish, but the RSI and trading action today indicate we may have further to drop before a nice entry appears.  I am considering $130 on volume or $110 as a support.  If we cannot find support at $110 (as we almost lost today), stay away.

Holy bottom is out investors.  If foreign indexes are any indicator, we are in for a rough, bloody, scary Tuesday.  Congratulations to those of you purchasing index puts on Friday, with the VIX relatively low last week, it looks like you’re in for a cherry morning.  When all is said and done a TON of stocks will look cheap to you.  Don’t be fooled.  With a recession looming and analysts slow to lower expectations, this is not the time to be buying stocks using their P/E multiples (if it ever is).

That said, I’d like to make two exceptions: Energy and Healthcare.  If we assume a 5-10% decline in earnings and look at historical and S&P P/E ratios, Healthcare, Energy, and Technology are the only sectors that are truly cheap.  I am throwing technology out.  That said, if you must bargain shop take a look at the ETFs surrounding these sectors.

I have to admit, I owe my blog readers an apology.  For the past four months or so, I have been taken away from regular blog writing by a project that is very important to me.  That project is Campus Stocks (http://www.campusstocks.com).  Below is a version of a press release I will be doing shortly.  Thanks for your support and feel free to use this blog to contact me.  I hope to eventually move the blog to the Campus Stocks platform or return to adding posts here.

College rivalries are often played out on the hardwood or gridiron.  Michigan-Ohio State, Georgetown-Syracuse, Harvard-Yale all have legendary athletes who battled for school bragging rights.  Now has come the time for these universities to battle it out on the stock ticker.

Campus Stocks, a new social networking website for student investors, has launched a new platform to give MBAs, B-Schoolers, and stock junkies alike a place to battle for their own reputation and that of their school.  The main feature of the site is fantasy stock market competitions that can pit student investors against each other individually or school versus school.  For example, in the testing phase of the site the Little Three (Amherst, Williams, and Wesleyan) competed in a contest which saw Williams dominate its rivals. 

The competitions go beyond college versus college.  For example on January 30 an ETF only competition begins where users can compete only choosing different ETFs that are publicly traded.  In December, the site ran a test contest entitled the December Rally contest in which "eagleeye" a user from American University took down the competition with a pure natural gas play.

The site goes beyond the stock picking contests, however, and gives each individual an opportunity to engage in the financial markets on a deeper level.  Each user can submit stock forecasts, investment ideas, create portfolios, and comment on others ideas.  This type of shared collaboration will help foster student interest in the stock market and hone their market expertise.