Tuesday, May 20, 2008

Energy Still the Best Thing Going

Boone Pickens continues to get a lot of face time on CNBC with oil prices skyrocketing. He continues to speak his mind and I'm sure happy he is doing it. The world can produce 85 million barrels of oil per day, and we're using 87. According to Pickens, this is the reason why prices have gone up. Not the weak dollar. Not speculation. It is time to get some leadership on this issue. He said no one running for president will address the issue, either because they don't understand it or don't want to talk about it. I honestly think the people in Washington have no idea what to do with energy. It is kind of frightening. But its also an exciting time, because there are lots of ways to make money in energy stocks right now. Stay away from diversified oil companies, or anything to do with refining. Beyond that, its hard to miss. My favorites are natural gas companies (think CHK, XTO, EP), oil services (think SLB, NOV), and offshore drillers (think NE, RIG).

I've talked at some length about infrastructure companies performing well. This is in large part due to building energy infrastructure. New plants, pipelines, nuclear facilities, power grids, wind turbines, solar infrastructure. This is work that only a handful of companies can pull off, and their order backlogs are increasing. In this space, think of ABB, FLR, FWLT, JEC, CBI. Most of these stocks have risen quite a bit, but all have a great outlook.

Can anyone give me a reason to buy a financial stock right now?

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