Every cloud, no matter how big, has a silver lining. The same is true fur Gustav. According to the U.S. Minerals Management Service over 96 percent of U.S. Gulf oil production and 82 percent of natural gas output had been closed as of Sunday afternoon; that means that the futures and spot energy markets will flurish.
In reality we have enough output and reserves to last us for a few months, and refining capacity is already maxed out, but for months now the energy markets have not opperated on fundamentals.
For medium term investors look for bargins in companies that build and repair drilling rigs and other oil and gas infrastructure. Some of those companies are:
CONSTELLATION ENERGY (CEP); ROWAN COS INC (RDC); ATWOOD OCEANICS INC (ATW); and PRIDE INTL INC (PDE). These are companies that will take a loss over the next few days, but they have very strong upside and incredible earning potential. If you are in a position to buy and hold for a few weeks or even months, you will certainly see some profits. A word to the wise, once you buy do not look at the price until after the storm is over.
There are some companies that will bring profits in the short run, those are the companies that have surplus product and can ramp up production to meet the world's needs. GeoGlobal Resources Inc is a very good choice, they explore mainly in India and ahve a very short cycle for getting product to market. Devon Energy (DVN) is another strong choice, mainly because it can weather the storm(s) and not to mention that the stock is currently trading at 12 times P/E. The third on our Pick List is PETROHAWK ENERGY CP (HK). Last, look into TRANSOCEAN INC (RIG). These are all very strong pics for the Holiday shortened week.
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