Protect Your Money from the Fed’s BS with New Oil Plays
I hope you didn’t get suckered in by the Fed this week. Wednesday’s rally, which came just after the Fed announced a 50 basis point hike in the fed funds rate (instead of 75), wasn’t a sign to run back into the markets.
That was nothing but short covering. The markets are down again today and the trend is likely to continue downward until the Fed changes course. And it will.
Until then, we need to stick with what’s working, with the tried and true companies still making great earnings, to turn a profit – and I’ve got just the plays for you.
Watch today’s Buy, Sell, or Hold by clicking the video below, or see below for the transcript.
05/06/2022 Buy, Sell, or Hold Transcript
Hey everybody! Shah Gilani here with you Friday BS.H, that’s Buy, Sell, or Hold.
But, speaking of BS, I hope you guys didn’t get suckered into the Fed Fake Rally on Wednesday. It looked real good, didn’t it? Just because the Fed only raised 50 basis points and expectations on the ugly side were for a 75 basis point hike. They only raised 50! Woohoo! Everybody off to the races.
That was nothing but short covering because of the pessimism. That’s it, people.
It is Thursday at 12:30p ET as I am recording your Friday BS.H. The Dow is down more than 1000 points, almost coming on 3%. And then the Nasdaq Composite is down just shy of 600 points, or 4.57% down.
Don’t get fooled by the Fed’s BS, okay? They’re going to continue to hike and it’s going to get ugly for the markets. [The markets are] going to continue to get hammered. There will be volatility. There will be up-days. There will be short-squeezes like we saw yesterday, Wednesday on Fed Fake Day. But, generally speaking, this is a downward trend.
We’re gonna continue to go down until the Fed stops and, believe me, they’re going to. Stay tuned from my next article, but that’s for next week. Let’s handle BS.H business today.
You want me to comment on a lot of energy plays, so let’s hit those first and fast.
First up, ConocoPhillips (COP) – it’s a buy. Yeah, it’s a buy for a lot of reasons.
#1, on a personal basis, I like oil. I think that oil WTI (West Texas Intermediate) is gonna hit $150 by the end of the summer. It could happen before the end of the summer. Oil is already starting to work its way back up.
I have a big position in oil and I’m sticking with it. And, I think that all companies that are hitting it out of the park in terms of their earnings and profitability are all pretty good to buy right now. So, COP is a buy.
This is a $46.66 billion revenue company (that’s the trailing 12-months) with a profit margin of 17.32%.
The quarterly revenue growth reported in the last quarter was an insane 177% year-over-year.
So, trading around $101 and change… it’s a buy. If you don’t like the market, if your nervous and you’d like to bail out of a falling market, put a 15% stop on. But ConocoPhillips is a buy here. Put a 15% stop on if you don’t want to stick with it longer term. That’ll get you out around $85.
Next up, Occidental Petroleum Corp (OXY).
A lot of you asked me about OXY because Warren Buffet has acquired a big stake of it.
Now, I don’t buy anything just because Warren Buffet owns it because he already owns it. He’s not buying it. He’s not accumulating. He’s not gonna put a floor onto he price, cause he’s gonna be bidding it up. No, he’s already taken his stake.
If you think that Warren Buffet is the premier investor of our time and you want to be in the same stocks? Then, yeah, it’s a pretty good play to be in.
It’s a good play for me and it’s a good play for you because we like oil, don’t we? It’s a buy because, with $26+ billion in revenue and a profit margin of just under 9%, the company is extremely profitable.
An interesting thing about OXY is there’s about a 10% short position across the floating shares. That always means there’s a potential for a pop in there. Why such a big short float position here? My research didn’t yield any reason. Maybe there’s some bets against OXY. Maybe there’s some hedges against it. I don’t know, but I don’t see that in any other reasons. As far as I’m concerned, that’s a positive
So, OXY is trading around $61 – and it’s a buy. Put a 15% stop on it.
Next up, another oil stock. This was an interesting one that a couple of you sent in: Vermillion Energy Inc (VET). It’s a buy for the same reasons that the others are a buy.
They’re an exploration business and I like what they do. It’s a much smaller company, about $3.17 billion market cap – small compares to OXY’s $51 billion and COP’s $123 billion. But, I like what they do.
The revenue for the trailing 12 months is $1.29 billion, and the profit margin – are you sitting down? – is 60.66%. They make money. I think it’s a buy right here. It’s trading around $20.50. So, it’s a buy.
Put a 10% stop on this one. The only reason I say 10% stop here is because this might be a little more volatile. Compared to its debt (which is $1.73 billion), it’s got a very tiny cash position of $6 million. And, which leverage -free cash flow is negative, they can make that up. I don’t like to see that on a company with this kind of profit margin, but let’s hope they continue to make good profits and they’ll make that up. That’s the only thing that bothers me about VET
Its quarterly revenue growth, year-over-year is 145% – so, yeah, buy VET. Buy it around $20.50 and put a 10% stop under that, and I think you’ll go to the park.
Last, but not least, American International Group Inc (AIG). One of my favorite insurance companies.
Forget what happened in 2008, that division is gone. They got a little too clever, shall we say, for their own interests – trying to leverage stuff up to make a fortune. The guy who was running that division was gonna make meg-billions on the profits he hoped to generate.
That’s long since passed them. AIG is back to its roots. It’s a growing company. Quarterly revenue growth year-over-year was a staggering 50%. This is a $52 billion revenue company with profit margins of 18%.
You want to own AIG. It’s trading around $62.22, but if you’re a little nervous, put a 10% spot on it. That would take it down to about $55.80. Why is that a good stop? Because that would be below the 200-day moving average, which, right now, is $57.47. Your stop would be below that, which is a pretty good place for a stop. You’re risking very little for, potentially, AIG to continue its stellar move off.
That’s it. COP, OXY, VET, and AIG – all buys to close out this week.
Cheers. Catch you next week.
Thanks, can they be long term options ?
Still waiting for the IPO’s Rights to develop the Warrant Base and make some transactions positive. Until then, there is a lot of Interest in selling more Services, that are costly. Yet, now the Resource Well needs too be Replenished and Buying All the Past Knowledge and Performance Reviews are not going to Provide Capital for those Investments. As the Adage Reveals, “Proof is in the Pudding” Thank you for putting up with my Humble Observation. “Time is of the Essence!”
Retired Petroleum Geologist: I own COP and VET. I have lately focused on Oil/Gas service companies. There has to be and is an increase in drilling. So my investments include Halliburton, Schlumberger and U S Silica Hldgs Inc. SLCA. There could be a shortage in quality frac. sand. This make SLCA interesting.
Thank you for the names of the stocks to Buy.
Thanks for the tips!! I’ll go do some research and see what’s going on!! Thanks again for these starting places!!!!