Long Term Trends: Part 3: Minerals, Metals, and Mining

With the Multi-Year Globalization Trend in place, minerals and metals are in high demand. Growing economies especially in the emerging markets need minerals and metals such as copper, driving up demand.

Gold is often used as a hedge against inflation.

Specialty metals are also in demand. For example, new generations of airplanes need lighter materials that specialty companies can provide.

Companies include:

1. Freeport McMoran (FCX), Gold and Copper Company
   
2. Rio Tinto (RTP), Copper, Aluminum, Gold and other materials and minerals.
   
3. US Steel Corp (X), Steel Company
   
4. Michel Steel (MTL), Russian Metal and Steel Company
   
5. Posco (PKX), Korean Steel Products
   
6. Norilsk (NILSY.PK), Russian Nickel Company
   
7. iShares Gold ETF (GLD)
   
8. iShares Silver ETF (SLV)
   
9. Precision Castparts (PCP), Specialty Metals
   
10. Allegheny Technologies (ATI), Specialty Metals
    
11. Peabody Energy (BTU), Coal Company
    
12. Joy Global (JOYG), Mining Equipment Company
    
13. Bucyrus (BUCY), Mining Equipment Company
    
14. Layne Christensen (LAYN), Mining Equipment Company
    

Long Term Trends: Part 1: Energy, Oil, Coal, Nuclear, Cleanup

Forever Portfolio Series

James Altucher, of TheStreet.com and Stockpickr.com, is writing a book: The Forever Portfolio: How to Pick Stocks That You Can Hold for the Long Run.

James Altucher hopes to show investors how to build a strong, consistent long-term portfolio, diversified enough to withstand the various cycles of the market.

Inspired by this, we will be starting a series over a period of time highlighting some long term trends. Some of the trends may be working right now, but some of them may start several years from now but last a long time.

Energy

Energy is a long term trend. Oil price is zooming. Demand will be increasing over the long term as countries all around the world, especially those countries in the emerging markets (such as China and India) demand more energy and oil.

Supply will remain limited, and rising energy prices (or consistently expensive energy prices) will remain a long term trend.

Integrated Oil Companies

Some integrated Oil Companies to look at:

1. Exxon Mobil (XOM)
   
2. Conoco Philips (COP)
   
3. CNOOC (CEO), Chinese Oil Company
   
4. Petro China (PTR), Chinese Oil Company
   
5. Petrobras Energia (PZE), South American Oil Company
   
6. Lukoil (LUKOY.PK), Russian Oil Company
   

Oil Services and Exploration

Oil companies need help searching for new oil, drilling, extracting oil from oil sands, and all other forms of help. Some of these oil services companies could benefit.

1. Schlumberger (SLB)
   
2. Halliburton (HAL)
   
3. Transocean (RIG)
   
4. National Oilwell Varco (NOV)
   
5. Nabors (NBR)
   
6. Ensco International (ESV)
   
7. Petroleo Brasileiro (PBR)
   

Canadian Oil Sands and Other Energy

Canada has the Largest Crude Oil Reserve, but much of it is in Canadian Oil Sands, which can be difficult to extract, but becomes profitable as energy prices remain high.

1. Suncor (SU)
   
2. Canadian Natural Resources (CNQ)
   

Natural Gas

As oil zooms higher, other forms of energy resources are needed and this incldues Natural Gas.

1. Chesapeake Energy (CHK)
   
2. Canadian Natural Resources (CNQ)
3. Andarko Petroleum (APC)
   
4. Encana (ECA)
   
5. Devon (DVN)
   
6. Apache (APA)
   

Oil and Gas Pipelines

Gas and Oil needs to transported.

1. Williams Co (WMB)
   
2. Spectra Energy (SE)
   
3. Enbridge (ENB)
   
4. Kinder Morgan Energy (KMP)
   
5. El Paso Coroporation (EP)
   

Refinery

Oil needs to be refined.

1. Valero (VLO)
   
2. Marathon Oil (MRO)
   
3. Sunoco (SUN)
   

Oil Shipping

Oil needs to be shipped all around the world.

1. Frontline Ltd (FRO)
   
2. Nordic American Tanker Shipping (NAT)
   
3. Overseas Shipholding Group (OSG)
   
4. Teekay (TK)
   

Coal

Coal is one of the most inexpensive forms of fossil fuel. Some people complain about the environmental implications. There are new technologies out there.

1. Peabody Energy (BTU)

Coal Services

1. Bucyrus (BUCY)
   
2. Joy Global (JOYG)
   

Railroads for Coal

Railroads are needed to transport energy products such as coal:

1. Union Pacific Railroad (UP)
   
2. CSX Transportation (CSXT)
   
3. Norfolk Southern Railway (NS)
   

Nuclear

Nuclear can provide a lot of energy for very long time, but detractors do not like the environmental implications.

1. Cameco (CCJ)

Environmental Cleanup including Nuclear

With all these byproducts, the environment needs to be cleaned up.

1. American Ecology (ECOL)
   
2. Clean Harbors (CLHB)
   
3. Energy Solutions (ES)
   

Alternative Energy

Alternative Energy is still a very speculative area, but if you wish to research, you may. Alternative energy includes ethanol, bio-fuels, solar, wind, and even wave power. As of this moment, more funding will be put in alternative energies in a world where energy prices are zooming too high. Students and researchers will be researching new and more profitable ways to provide energy.

1. First Solar (FSLR), A Solar company
   
2. Any Agriculture Company
   
3. Energy Conversion Devices (ENER)
   
4. Imperial Sugar (IPSU), another source of ethanol
   
5. Toyota Motors (TM), a leading hybrid engine car company
   

Stock Chart: AMTD, Ameritrade, Nice Turnaround (June 18, 2007)

Ameritrade ( AMTD ), has come back nicely after a 1 year downtrend. We recently see the Golden Cross, where the 50 day Moving Average goes above the 200 day Moving Average. The stock also broke above the $19.69 resistance, and the stock is both above the 50 day and 200 day moving average. The turnaround looks intact, though some might argue that the stock may be overextended above the 50 day and 200 day moving average.

To check the status of AMTD on a daily basis, here's a specially formulated stock chart of AMTD.

Turnaround Stock Patterns

If you've been following this blog , you may have noticed that there are many other stocks with similar turnaround patterns. The general idea is that you can draw a downtrend line on the a semi-log chart pattern and see if there is a breakout on good volume. It would also be nice if this breakout coincides with the stock going above either the 50 or 200 day moving average.

Yes, you can't always catch the optimal buy point, but you can still buy a stock if it remains in an uptrend, and if it is above both the 50 and 200 day moving average.

Other Stock Examples

1. GLW (Corning) Chart

2. DELL (Dell) Chart

3. BTU (Peabody Energy) Chart, a Coal Company.

Stock Chart: BTU, Peabody Energy, Coal Company is Coming Back

Peabody Energy (BTU) is a Coal Company. For one year, from around May 2006 to early April 2007, BTU had been on a downtrend. Then on April 2007, it spiked up on good volume, breaking the one year downtrend line, and has gone above the 50 and 200 day moving average. This would have been a great Buy Point.

This jump in Peabody Energy (BTU) also coincided with the time that Warren Buffett had been buying the rails. Jim Cramer has said suggested that this play is an indication that Coal is not over .

Even if you didn't catch that point, the 50 day moving average has moved above the 200 day moving average, which is a bullish sign. BTU is also above previous resistance of $48.46, and has broken out of a Dec 2006 to April 2007 Bullish Cup and Handle pattern. BTU is also above both the 50 and 200 day moving average.

Even if you didn't catch BTU at the ideal buy point, you still may be able to catch BTU's run, as the new uptrend is still intact.