744% Gain in 12 Years! (Energy Crisis in Natural Gas)
744% Gain in 12 Years!
Thursday, November 3rd, 2005
Baltimore, MD * Jackson, WY * Missoula, MT
* 744% Gain in 12 Years!
* Waking Dragon
* All My Dollars
"When planning for a year, plant corn. When planning for a decade, plant
trees. When planning for life, train and educate people."
- Chinese Proverb
_____
Dear Wealth Daily Reader,
Today's Wealth Daily is about, of course, the current state of world
energy.
But before I begin, I would like to quote a report from Mike Schaefer
that was published in the Fall of 1999 when his letter was published by
Agora.
I'm holding the report in my hand.
It's titled The First Great Event of the 21st Century.
Here are the first 4 paragraphs from Chapter 8, page 36:
"There are a lot of superb opportunities in the resource sector
right now. Oversold gold stocks, diamonds, platinum.
But none of them holds the financial promise of one specific
opportunity. Hands down, this is the single greatest financial
opportunity we may see in our lifetime.
I'm talking about investment in oil and natural gas.
You see, we are at the beginning of a trend that will accelerate
- until the world effectively runs out of hydrocarbons in the year
2100."
Those words were written 7 years ago when oil was selling for $25 a
barrel and natural gas was going for $2.31 per mcf.
As you might imagine, people laughed when they heard Mike talking about
a coming energy crisis.
Nobody wanted to hear his alarm bell.
All mainstream investors cared about were the next Cisco Systems,
Amazon.com, and Yahoo. And Wall Street slung it like there was no
tomorrow. Stock analysts, barely out of college and drunk on their own
bile, measured the success of Internet companies using idiotic metrics
known as "stickiness" and "eyeballs."
Profits?
Forget about profits. If an Internet company were to make money, it
would be valued differently and the stock wouldn't command its
speculative premium.
Venture capitalists urged start-ups not to become profitable too quick.
It made sense.
And we all bought it. I did too.
Oil?
Heck, oil was yesterday's news. It was an industry of dinosaurs. Oil
would flow forever.
At the time, oil was going for $25 a barrel and natural gas was selling
for $2.31 per mcf.
In 1999, Exxon's stock gained 13%. The NASDAQ gained 84%!
While Wall Street was busy peddling worthless paper like Pets.com and
Furniture.com, Mike Schaefer was busy building a portfolio of obscenely
cheap natural resource stocks.
Mike was spot on.
While Mike's portfolio soars, the NASDAQ now sits at 2100, is down 58%
since March 2000 and hasn't made a new high in over 5 years.
Natural gas, however, is up 463% since Mike released his legendary
report.
Here at Wealth Daily, we believe natural gas is going a lot higher.
Why?
Well, for one, because Mike thinks so.
But we rely more than just the crystal ball of the Stock Wizard of
Wyoming. Last Friday's Globe and Mail ran a story titled: The Real Gas
Crisis.
It began...
"Forget oil. Natural gas is the true energy crisis. In the 1990s, North
American gas prices averaged $2.10 (all currency in U.S. dollars) per
million British thermal units (BTUs), the standard industry measure. By
the early autumn of this year, prices had shot above $14.
Gas was supposed to be the cheap and environmentally friendly
alternative to oil for heating homes, and to coal and nuclear power for
generating electricity. Things haven't turned out as planned in recent
years, due to falling reserves, booming demand, a hurricane or two and
some spectacular gas discovery duds.
After deregulation in the mid-1980s, huge quantities of gas flowed into
the market. Prices fell. Pipelines were built and exports took off.
Millions of North American consumers bought gas furnaces, and dozens of
new gas-fired electricity generating plants were built.
After Americans became Canadian gas junkies, the 1989 Canada-U.S. Free
Trade Agreement ensured their dose couldn't be cut off. As a result,
Canada's gas production has more than doubled since the mid-'80s.
Five years ago, the inevitable happened: Gas prices began to rise.
Thousands of new wells were punched into the ground every year, but
proven reserves did not surge.
Production is now on the wane, according to the Canadian Gas
Association. Proven (though not potential) gas reserves are in
precipitous decline.
They peaked at 99 trillion cubic feet in 1984, but fell to 56.6 tcf by
the end of last year. At Canada's current rate of consumption and export
(gas exports now exceed domestic consumption by about 40%), that's
enough to last almost nine years." (My emphasis added.)
So now we find ourselves between an empty gas tank and a 5000
square-foot McMansion to heat this winter. What to do?
We've been buying energy stocks across the board.
Specifically, Mike Schaefer has been buying small and microcap stocks
that are producing both conventional and unconventional natural gas. And
he's been doing it with astonishing success.
Take his Secret Stock Files, for instance. He's published that letter.
under 2 different names (Outstanding Investments and Aggressive
Speculator) for the past 12 years.
In those 12 years, Mike has purchased and sold 101 stocks. Of those 101
sold positions, 88 have made money while only 13 lost money. That's a
winning percentage of 87%.
The return on all 101 sold positions, losers included, has been +744%.
Amazing.
Here's the deal. The bull market in natural gas - and in natural
resources in general - is here to stay for a long time.
And I want you right there with Mike profiting the entire way. Please
read this special note from Mike that shows his entire sold portfolio.
Trust me, you'll be just as impressed as I was. Mike is the reason I
left Agora to become the publisher of his Secret Stock Files
<http://wealthdailymail.net/cntdir.asp?num=59> .
Sincerely,
Brian Hicks
Publisher
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Jerry writes...
Mike Schaefer wants you to enjoy those same gains. And he's willing to
make you a special offer: Get both of his highly successful investment
services, Secret Stock Files and the Pure Energy Report, for one low
price.
In the coming weeks, Mike will be releasing his much anticipated Oil
Shock Insurance portfolio, which includes 6 "must-own" stocks every
investor should have for the winter.
Plus, he'll throw in 6 FREE reports, detailing his favorite natural
resource stocks right now.
To take advantage of this special offer, go to:
<http://wealthdailymail.net/cntdir.asp?num=56>
[ Secret Stock Files & Pure Energy
<http://wealthdailymail.net/cntdir.asp?num=56> ]
_____
All My Dollars
Last week, I wrote about AMD and how I think they are positioning
themselves for a real run at Intel. As I run the Asian Investment Desk
here at Wealth Daily, my analysis stemmed mainly from the
California-based firm's significant forays into the Chinese computing
game.
If you recall, AMD is licensing the x86 Geode chip to Beijing University
for use in its teaching labs. The Geode is a basic model, similar to
AMD's high-end Athlon and Intel's Pentium in its basic instruction set.
This will introduce many budding engineering minds to AMD's brands and
technology by giving them practice with an entry-level model.
And you can bet that AMD will hire many of those engineers as Beijing
University becomes a sort of farm team, developing talent for the top
while AMD retains intellectual property rights for the school's x86
project work.
Another Motivating Development
It's nice to help folks out. In a real way, to bring people-knowledge is
to give them the stuff of life. The world's most elaborate
infrastructures now exist in invisible swarms of electrons transmitting
packets of information at light speed. Yet there are still many for whom
this world will remain obscure, and who do not currently receive the
benefits of the Digital Age.
Therefore, AMD is spearheading a multi-company effort to bring computing
power to half of the people in the world by 2015. Given a projected
population of 7.2 billion, that's a massive undertaking.
Yahoo and Radio Shack are on board for production and sponsorship, and
the Massachusetts Institute of Technology, one of the world's top
engineering brain trusts, is contributing know-how.
Thin means portable, and with MIT currently helping AMD to produce
laptops It's an socially and economically well-informed decision to take
such a step, as experts predict that the thin-client market.
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_____
Wyse Decision
They hope to produce a durable laptop computer that will be available
for $100, mainly to children in poor countries through sponsorship
agreements. Now they're teaming up with Wyse Technology, producers of
thin computing devices.
Wyse provides slim-profile solutions to some of the corporate world's
heaviest players, both to tech firms and to those who simply realize the
importance of high mobility in today's international trade.
41 of the Fortune 100 are Wyse Technology clients.
Microsoft has named Wyse their "Embedded Partner of the Year" for 3
years running.
These are heavyweight credentials that make a strong addition to the
50x15 squad and AMD's own personal list of allies in its run to beat
Intel.
Still Asleep
AMD's recent market response looks bullish, but not as bullish as I
think it should be.
Believe it or not, AMD was trading at the same level in 1984. I think
this reflects underappreciation of AMD's unfolding opportunities in
high-growth markets around the world.
One of the key reasons that the high-growth factor is overlooked is that
the market currently does not exist. MTV didn't have an African-based
network until this past year, and I'll bet Apple doesn't spend much on
iPod billboards in Soweto.
AMD is creating its own market by cultivating a generation of users who
know its name.
As with the sponsorship of university-level Chinese engineering
programs, AMD is acting in the present to secure its future.
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_____
Priced for Growth
AMD is trading at a high price-to-earnings ratio of 225, meaning the
market is pricing it for superior growth in the coming years.
With a market cap of $9.17 billion and current gross revenue at $5.27
billion, AMD trades slightly over 1.7X revenue. And with a cash position
of $1.34 billion, AMD has the capital to take it to the next level.
Combine the cash capital with the intellectual capital it's acquiring in
China, and we have all of the makings of a stock that'll grow 25% a year
for the next ten years!
I love it.
And so does Wall Street.
Analysts covering the stock estimate AMD will grow its EPS 100% between
2005 and 2006, going from a net of $0.39 per share to over $0.78 per
share.
Growth stock analysts typically value a stock by multiplying a stock EPS
growth rate to its current year's EPS estimate. If we take 100 and
multiply it by 0.39, we come up with a price target of $39.
That's a 62% premium to its current price of $24. If it does half of
that, I'll be happy.
Advanced Micro Devices (AMD - NYSE) is a buy at current levels under $25
a share.
- Sam Hopkins
posted by Victor Lloyd Smith @ 6:22 PM
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