240 240 correctly predicted forecasts
Send me real-time posts from this site at my email
Chris Lau

​Monday’s Action list: Basic Materials Edition

  • 1.Petrobras (PBR) is on watch after the stock fell nearly 19% on the month. It gave up all of its gains made since October 2016. The WTI crude price drop is hurting PBR the most. Fundamentals are improving: the court is allowing for asset sales.
  • 2.Kinder Morgan (KMI) showed a “double top” at the $22 - $23 / share range. Should the stock trend lower in the next month, the dividend yields will move from 2.1% to 3%, making the stock one to buy.
  • 3.BP plc (BP) is range-bound in the $32-$33 range despite a generous 7 percent dividend yield. BP is ideal for investors seeking long-term yield and capital appreciation.
  • 4.Freeport-McMoRan (FCX) had a “double top” at between $16 and $17/sh. The company is cutting debt (LT Debt / Equity is now 2.65x) but the strike in Peru will hurt the quarter’s results. FCX is a hold if copper prices hold.

  • 5.In the gold sector, Goldcorp (GG) and Kinross Gold (KGC) are compelling. GG has little debt while KGC benefits if gold prices move higher.
  • 6.In the UDW space, Transocean (RIG) is down but long-term, it is not out. Look for $10 - $11 as the rally point. The stock closed at $12.47/sh. Seadrill (SDRL) is NOT a buy. Avoid. ESV and DO (Diamond Offshore) are ones to avoid, too.
  • 7.Cliffs Natural Resources (CLF) gave up 25% of its gains in the last month. China’s infrastructure spending this year and the U.S. spending later this year (or in 2018) suggests the drop in CLF will not last.