Thursday, December 16, 2010

Update to YRC Worldwide Fundamentals Compared to the Trucking Industry

People have been requesting an update to the numbers in my YRC Worldwide Fundamentals Compared to the Trucking Industry ranking. So here are the updates to the numbers for P/E, P/S, P/B, and Profit Margin. Debt to Capital % and Current Ratio have not changed during this time span so I will not update those items until after Q4 results. In this round it's a good news/bad news situation for YRC Worldwide. Their Book Value has gone further negative as they lost money in the last quarter, but their margin is improving and revenue has increased quarter over quarter. Refer to my original article to get commentary related to them. If there's another metric you'd like to see in this ranking, request it in the comments section and I'll see if I can dig it up the next time I do this. The companies involved in this ranking are:

Arkansas Best Corp NASDAQ:ABFS
Con-Way Inc NYSE:CNW
JB Hunt Transport Services Inc NASDAQ:JBHT
Landstar System Incorporated NASDAQ:LSTR
Old Dominion Freight Line Inc NASDAQ:ODFL
Werner Enterprises Inc NASDAQ:WERN


Price to Earnings

WERN...21.8
LSTR.....24.0
ODFL....26.9
JBHT.....27.6

Four companies have positive earnings. Not much has changed under this metric.





Price to Sales

YRCW....0.03
ABFS.......0.4
CNW........0.4
LSTR.......0.8
WERN.....0.9
ODFL......1.2
JBHT.......1.3

YRCW's P/S metric actually dropped from 0.04 to 0.03. If they can turn their margins around, they could have a very good P/E at this price.

Price to Book

ABFS.....1.5
WERN....2.1
CNW......2.2
ODFL.....2.6
LSTR......7.0
JBHT......8.1

This is where the bad side of YRC Worldwide gets worse. They have a negative book value that is getting worse. Their book value in the prior article was -$1.71. Now it's -$2.53. At that pace it could easily go to -$3 to -$4 next year.

Profit Margin

JBHT........5.02%
ODFL.......4.54%
WERN.....4.13%
LSTR.......3.43%
CNW......-0.01%
YRCW....-4.80%
ABFS.....-7.43%

The good news for YRCW is that they managed to improve their margin from -10.44% to -4.80%, making it a lot more plausible for them to start pulling a profit sometime next year as long as they keep their costs under control. A positive margin of 1% over the course of the year would cause their P/E metric to be dominant in the industry because their revenues are so much larger than their market cap when looking at the P/S.The stock price could skyrocket thanks to that. A lot of investors are betting on this happening. Meanwhile, there's a lot that look at that Book Value and see imminent bankruptcy protection written all over YRCW. It will be interesting to see where this company lands.


All numbers are updated as of December 16th, 2010. I do not own any of these companies.

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Wednesday, December 15, 2010

UNG and HNU.to - A Great Place to Throw Your Money Away

Due to the cold weather and recent natgas price surge, the UNG and HNU.to longs are coming out of the closet again.There is one very strange phenomenon I've been seeing in the markets. And that is the unstoppable and undeserving popularity of HNU on the Toronto Stock Exchange. Take a look at the chart here:

Since its inception in 2008, it had 6 months of prosperity where it doubled, and since then has lost about 99.7%. Its spent about 95% of its life within 10% of its ever-decreasing lows, yet it frequently is the #1 daily volume play on the TSX with anywhere between 5M and 20M in volume a day. Now why is that? Well for one, it a 2x levered fund on the daily performance of Natural Gas.
If we go to this very useful Nat Gas streaming price link: 

You'll notice 90% of people are bullish on nat gas at this price. Not to say this is a very scientific poll, but it does show that there are a ton of investors and speculators out there believing that nat gas is about to go up. Huge. 

So I ask myself, ok, let's say nat gas doubles to about $8. HNU.to will go up about 4x, probably less than that unless the doubling nat gas price is literally straight up, from $6.50 to $26. However, something like Compton Petroleum would go from the 40+ cent range to I would think at least $3.50 as it would be massively profitable at $8 nat gas, nearly a 10x gain. And the downside risk in Compton is much, much less than the downside risk in HNU. CMT.to is a real company with real assets. HNU.to is some BS levered trading scam. I can only imagine what would happen to the price of Compton if it had 5M-20M a day in volume like HNU.to has.   

Then you look at UNG in the States. People would rather buy that to speculate (or in their own messed up heads "invest") in natgas rather than buying a company with a ton of potential like Chesapeake or ATP.We all know China wants Chesapeake. Compton and ATP would be other things China would look at. What we know for sure though is that China does not want to buy HNU.to or UNG. What is there to buy exactly?

Its probably a lesson that many people need to learn, not just on the natgas industry but everywhere. The popularity of short funds I can understand since there's very few companies out there who's success depends on the fall of the stock market and economy. But for leveraged long funds, there is ALWAYS an industry play out there that has a better upside potential than 2x or 3x and it certainly has less downside risk than, well, -99%. 

But people like to piss away their money. All their technical indicators suggest natgas is going up tomorrow so it's time to buy HNU.to! Because CMT.to might not go up that day even if natgas increases. But if they are wrong and natgas falls then their HNU.to "trade" just turned into an "investment" where they forever average down into oblivion.

Click here to see some information on three Canadian oil resource stocks with tremendous potential

Click here to learn how to trade the forex market  

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Monday, December 13, 2010

How to Trade the Forex Market

I have been successful trading currencies over the years. Actually much more successful (lucky?) than trading stocks. The advantage to trading currencies is that you aren't really "buying" or "selling" anything. You are purely going long one currency and short another. In 2008 when all my stocks were getting creamed I had my best ever currency trading month in October. So one thing is, you can use the market to diversify. The stock market is crashing? Short Aussie dollars. It's a lot easier than trying to sell all your stocks during a market panic. Especially one that occurs when the North American markets are closed.

You can't have any Enrons in the Forex market. That being said, many people lose on the market because they treat it like the stock market. They "invest" ie buy and hold a currency (or sell and hold) on way too much margin then get a margin call if the currency moves 1% or 2% against them. 2% may not sound like much but if you are leveraging 50 to 1, that's 100% of your account.

If you are interested in trying out the forex market, I highly recommend a lot of research and practice on it first. If someone is giving away a system to follow, don't follow it, it is junk. If you want to trade on someone's system, make sure it's reputable and you have a chance to make money on it. It amazes me that people are willing to risk $10K on the forex market and lose it all, but aren't willing to spend $100 or $50 or whatever upfront money it takes along with some time and thought to actually make good money on a forex system. If you wish to purchase a good trading system, I recommend this one. They use the same broker I do and have years of experience perfecting their system.


There are also a lot of forex robots/auto-trade systems out there. Basically some computer whizzes meet with stats whizzes and they develop a system that will consistently make you money over longer periods of time - the law of large numbers just makes it like that. All of these systems are proprietary, because, well these guys probably put years of time and effort into it so they aren't going to give it away for free.The two forex program traders I like are:

The FAP Turbo Forex Robot
The Forex Morning Trade System

The man running Forex Morning Trade System says you only need to trade 10 minutes a day, but I dunno, I kind of like trading more than that in a day. That's another point though. You can't spend TOO MUCH time on forex trading. Overtrading can be your downfall as well.

Good luck on your Forex endeavors!

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Sunday, December 12, 2010

OREX vs VVUS: How Does This Make Any Sense???

As of close on Friday, Orexigen Therapeutics has a stock price of $8.41 or a $400M market cap. Using Yahoo Finance they have a net cash position (cash less debt) of $97M. Subtracting that they have a $303M enterprise value.

VIVUS closed at $9.39 and has a $763M market value. Take away their net cash position of $143M and you are left with an enterprise value of $620M for their pipeline. One company has a drug recommended by the FDA, the other does not.

Now comparing VVUS and OREX straight up is not fair. Orexigen's got two drugs in the pipeline, but they are both obesity drugs that share some of the same compounds so really it's like they have one. Vivus' Qnexa programs are targeting Diabetes and Sleep Apnea as well so to compare the two companies we have to take the perceived market value of that portion of their pipeline out.

How can we do this? A way to try is to take a look at Arena Pharmaceuticals. Although they also have some drugs in their pipeline, the only one at a later stage is Lorcaserin so the company pretty much lives or dies off of the success of that drug. They have $177M in cash and $123M in debt so their net cash position is $54M. They have 121.4M shares outstanding. On September 13th their closing price was $6.85 a share. That's $832M in market cap, $778M in enterprise value. Once the dust settled, on September 17th they closed at $1.99, a $242M market cap and $188M enterprise value. The FDA concerns over Lorcaserin cost them 76% of their enterprise value.

Now let's look at VVUS. They have 81.2M shares. Initial reaction on their FDA non-approval caused them to drop from $12.11 on July 14th to $5.41 on July 16th. A drop from $983M to $439M in market cap or $840M in enterprise value to $296M in enterprise value. If VVUS' obesity drug lost the same 76% of its value as ARNA, it would have dropped from $717M to $173M. The value of their pipeline not related to the obesity program is 983M-717M or 439M-173M or $266M.

Going back to the start of this blog, VVUS' current enterprise value is $620M. Subtract the non-obesity part of the pipeline you're left with $354M of which the market currently thinks Qnexa Obesity is worth. That is WITHOUT any approval, just the excitement over possible approval after what happened to Orexigen.

So Orexigen's soon to be APPROVED drug Contrave is worth $303M while VVUS not yet approved Qnexa Obesity is worth $354M. I know that the data points on Qnexa are stronger, but to me an FDA approval is worth more than the data points.

If Contrave was given the same enterprise value as Qnexa of $354M, the market value of OREX would be $354M+$97M= $451M. with 47.58M shares outstanding, that's a $9.48 share price. If Contrave is worth 25% more (I think that's a fair assumption of where they should be given the relative state of each drug) that's $443M in Contrave and $540M in market cap, $11.35 share price. Assuming 50% more value over Qnexa, and the stock price is $13.20. You get the point. I think OREX is hugely undervalued right now when looking at VVUS.

Then you think about ARNA and how before the FDA concerns it was trading at a $832M market cap with $43M less in the bank than OREX. A market cap of $875M for OREX leaves it with a stock price of $18.39.


Take a look at what I think about ARNA and ETRM 

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Friday, December 10, 2010

Update to Key Fundamental Statistics for US Banks

Many people have been requesting an update to the numbers in my Key Fundamental Statistics for US Banks ranking. So here are the updates to the numbers for P/E, P/S, P/B, Profit Margin and Dividend yield. The numbers in the original article were after each company's Q3 results so the margins remain the same but these numbers do reflect most recent stock prices so I can understand why people would want to refer to updates. Refer to my original article to get commentary related to them.If there's another metric you'd like to see in this ranking, request it in the comments section and I'll see if I can dig it up the next time I do this. The companies involved in this ranking are:

Bank of America Corp NYSE:BAC
BB&T Corporation NYSE:BBT
Capital One Financial Corporation NYSE:COF
Citigroup Inc NYSE:C
Fifth Third Bancorp NASDAQ:FITB
JPMorgan Chase and Co NYSE:JPM
PNC Financial Services Group Inc NYSE:PNC
Regions Financial Corp NYSE:RF
Suntrust Banks Incorporated NYSE:STI
US Bancorp NYSE:USB
Wells Fargo & Company NYSE:WFC


Price to Earnings

COF….......6.7
PNC.........10.6
JPM.........11.2
USB.........16.3
WFC….....17.5
BBT..........22.6
Industry...30.5
FITB.......163.0

Again, using this metric, COF dominates. PNC and JPM would be the only other two to be seriously considered using the P/E. Every Canadian bank does better than the rest of the US banks so I would lean in that direction if I were a bank investor. C, BAC, STI and RF are all negative and thus aren't ranked.

Price to Sales

BAC.........1.1
COF……...1.2
RF…….....1.2
JPM….…..1.6
STI…...…..1.6
WFC….....1.8
FITB……...1.8
C……...….1.8
BBT….…..1.9
PNC….…..2.0
Industry…2.4
USB……..2.7

Nothing much to say here other than at least we can see where C, BAC, RF and STI rank because they can't go to negative sales. BAC actually does rather well using the price to sales metric.

Price to Book

BAC……...0.6
RF…...…..0.6
COF……...0.7
STI…...…..0.7
C……...….0.8
JPM……...1.0
FITB….…..1.1
BBT……....1.1
PNC……...1.1
WFC……..1.3
Industry…1.3
USB……..1.8

My personal favourite, BAC leads this list again. Nice to see that if it has a ton of toxic assets on its balance sheet, at least people are paying 60 cents on the dollar for them. To be honest, BAC does do pretty well relative to C. COF is near the top of the list here too, impressive since it's at least earning money the "accounting" way.

Profit Margin

PNC……...20.47%
COF……...17.68%
USB….…..16.54%
JPM……...15.86%
Industry…14.76%
WFC …....14.10%
BBT…….....8.96%
FITB……....5.12%
C……...…..2.50%
BAC……...-1.05%
STI…….....-2.83%
RF……....-18.18%

Not much to say here, other than the usual suspects round out the bottom and the more decent plays are at the top. Wouldn't mind seeing that JPM number AFTER they are forced to liquidate their silver shorts.

Dividend Yield %

Industry…2.45%
BBT……...2.43%
USB……...0.82%
WFC……..0.70%
PNC…......0.69%
RF…….....0.67%
COF….…..0.52%
JPM….…..0.51%
BAC……..0.35%
FITB……..0.31%
STI……....0.16%
C……..….0.00%

That's not a typo, every US bank pays a lower dividend than the banking industry worldwide. It's those blasted Canadian companies and their 3-5% dividends!!! You can tell I am pushing them hard right? If you're interested in a report that lists the top 100 dividend companies, see my blog on it. It's a $19 subscription service, just warning you before you click on the link and become disappointed in me. I find it useful and it costs about the same as commission on 3 trades. If I'm going to advertise, it's not going to be on crap.

All numbers are updated as of December 9th, 2010. I do not own any of these companies, probably for a pretty good reason!

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Wednesday, December 8, 2010

Do not let go of your OREX shares!!!

In case you haven't heard, Orexigen Therapeutics is up over 100% today on approval of its diet drug Contrave. Its hard to gauge an exact worth of a company after something like this has been done so I always look for previous examples and try to guess what will happen from there. The most similar case to OREX was what happened to DNDN in March 2007. Now check out these price histories on the stock:


DateOpenHighLowCloseVolumeAdj Close*
Apr 10, 200724.8525.2520.2622.1566,675,00022.15
Apr 9, 200720.0024.2719.8623.5878,665,10023.58
Apr 5, 200715.1018.2814.8418.0560,174,80018.05
Apr 4, 200715.0015.1514.6615.0813,677,80015.08
Apr 3, 200714.4715.4014.4714.6525,813,60014.65
Apr 2, 200713.2514.9913.1014.3043,706,30014.30
Mar 30, 200717.9218.0512.0012.9392,499,20012.93
Mar 29, 20075.225.225.225.2205.22
Mar 28, 20074.855.344.485.2232,840,9005.22

After a strong open on March 30th, the stock ended rather weakly. But within a few days the stock recovered to its prior high and went as high as $25 by April 25th. It came back down to earth after that, but that just goes to show you that the time to sell your OREX shares is not today, it's a couple weeks from now. Let those shorties burn a bit!!! No matter how weak the stock price gets, hold on. DNDN dropped from $18 to $12 so there were a lot of weak handed day traders that lost 30% that day who could have gained 30% if they were two-week traders.

ARNA and ETRM are also being pulled up by OREX today. You can read my bullish blog article here.

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Tuesday, December 7, 2010

LMAO @ AVSC making traders 58% Yesterday

I got an email in my inbox today proclaiming that:


AVSC gets the 58% swing I told you to look for

Microsoft Team-Up Gives AVSC Traders a 58% Return on Their Money! And Now the Sky's the Limit!


I find this just outstandingly funny because they gave their alert at 12PM, AFTER the stock already rose that much. It was down from noon hour by the end of the day. Its up a little bit in the morning on yet another pump. We'll see how long that lasts.

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Monday, December 6, 2010

Q3 Update for the Key Fundamental Statistics for the Oil and Gas Industry in the US

Provided below are some of the Key Fundamental Statistics for the Oil and Gas Industry in the US. These numbers are an update of my original article that can be referred to here. I recommend that you read that one to give this information some context. This article mainly focuses on producers or companies very near production and avoids the Income Trusts as they are valued much differently. Click here if you are interested in further in-depth analysis of the oil and gas sector.

The 34 companies included in this ranking are as follows. Mariner Energy has since been delisted due to its buyout from Apache so it is now excluded from this list when compared to the prior article:

Anadarko Petroleum Corp - NYSE:APC
Apache Corporation - NYSE:APA
ATP Oil & Gas Corporation - NASDAQ:ATPG
Advantage Oil and Gas Ltd - NYSE:AAV
Berry Petroleum Co - NYSE:BRY
Brigham Exploration Co - NASDAQ:BEXP
Cabot Oil & Gas Corp - NYSE:COG
Canadian Natural Resources Ltd - NYSE:CNQ
Chesapeake Energy Corp - NYSE:CHK
Concho Resources Inc - NYSE:CXO
Continental Resources Incorporated - NYSE:CLR
Denbury Resources Inc - NYSE:DNR
Devon Energy Corp DE - NYSE:DVN
EnCana Corp - NYSE:ECA
EXCO Resources Inc - NYSE:XCO
Forest Oil Corp - NYSE:FST
Gran Tierra Energy Inc - AMEX:GTE
Ivanhoe Energy Inc - NASDAQ:IVAN
Linn Energy LLC - NASDAQ:LINE
McMoRan Exploration Co - NYSE:MMR
Newfield Exploration Co - NYSE:NFX
Nexen Incorporated - NYSE:NXY
Noble Energy Inc - NYSE:NBL
Pioneer Natural Resources Co - NYSE:PXD
Plains Exploration & Production Co - NYSE:PXP
Quicksilver Resources Inc - NYSE:KWK
Range Resources Corp - NYSE:RRC
Rosetta Resources Inc - NASDAQ:ROSE
SM Energy Co - NYSE:SM
Stone Energy Corporation - NYSE:SGY
Swift Energy Co - NYSE:SFY
Talisman Energy Inc - NYSE:TLM
Ultra Petroleum Corp - NYSE:UPL
Whiting Petroleum Corp - NYSE:WLL


Price to Earnings


XCO……...4.0
ECA……..10.0
APA……..13.6
DVN……..13.7
UPL……...14.4
NFX……...15.2
CHK……...15.6
KWK……..17.5
FST……...17.6
CNQ……..17.8
BRY……..18.4
NXY……...19.3
PXD……...20.9
SM……....21.1
NBL……...22.6
PXP……...25.3
DNR……..26.1
Industry…27.0
SFY……..30.2
WLL……..32.6
CXO……...34.2
CLR……...36.6
GTE……...37.7
APC……...39.1
TLM……...39.7
COG……..43.6
ROSE……65.8
LINE……...87.1
BEXP…….92.3
SGY…….105.1
RRC…….122.3

AAV, ATPG, IVAN and MMR are excluded from the P/E ranking since they have negative earnings. SGY dropped significantly from 19.1 to 105.1.


Price to Sales


CHK……...1.5
SGY……..1.5
NXY……...1.8
ECA……...2.1
ATPG…….2.2
KWK……..2.8
PXP……...2.8
TLM……...3.0
DVN……..3.1
APC……..3.1
BRY……..3.2
SM……....3.2
AAV……..3.3
SFY……..3.5
MMR…….3.5
CNQ……..3.6
APA……..3.7
PXD……...3.8
COG……..4.6
DNR……..4.7
WLL……..4.7
FST……...4.8
NBL……...5.0
NFX……...5.3
GTE……...5.6
LINE……..6.5
ROSE……6.7
RRC……...7.0
UPL……...7.8
Industry…8.0
XCO……...8.1
CXO……..10.1
CLR……..10.1
BEXP……23.3
IVAN…....38.3


Price to Book

AAV……....0.9
CHK….…...1.2
ECA……....1.2
PXP……....1.3
NXY……....1.4
DVN….…...1.7
APC……....1.7
TLM……....1.8
DNR……....1.8
APA……....2.0
LINE…..…..2.0
BRY……....2.1
SFY…...…..2.1
CNQ…..…..2.1
COG……....2.1
NBL…….....2.2
SGY……....2.3
GTE…….....2.3
PXD…….....2.4
XCO…….....2.4
IVAN….......2.4
ATPG……...2.5
WLL…….....2.7
SM……......2.8
NFX…….....2.8
RRC……....2.8
KWK……....3.1
FST…….....3.1
ROSE……..3.6
CXO…….....4.4
BEXP……...5.4
UPL…….....6.8
CLR…….....7.7
MMR……...9.7
Industry…15.1


Price to Cash Flow


XCO….…...3.4
ECA….…...3.9
SGY….…..3.9
NXY……....4.7
CHK……....5.7
AAV…...….6.0
PXP…….....6.3
SM……......7.0
KWK….…..7.0
TLM……....7.2
SFY……....7.3
DVN….…...7.4
APC……....7.4
APA……....7.4
NFX…….....7.7
BRY……....7.8
CNQ……....7.8
FST…….....8.2
PXD…….....8.8
NBL…….....9.7
GTE……...10.0
UPL……...10.1
COG……..10.7
WLL……..11.6
DNR……..11.7
Industry…13.9
ROSE……14.6
RRC……..16.7
MMR…….18.9
LINE……..19.1
CXO……...19.2
CLR……...19.7
ATPG…….32.9
BEXP…….39.6
IVAN was excluded from the P/CF ranking as it has negative cash flow at the moment.


Profit Margin


XCO……...202.56%
UPL……...54.64%
NFX……...34.71%
FST……...30.01%
CLR……...27.51%
CXO……...27.12%
APA……..26.12%
DVN……..23.53%
BEXP…….23.35%
NBL……...22.71%
ECA……..20.98%
CNQ……..20.41%
PXD……...20.10%
WLL……..18.65%
KWK……..18.24%
DNR……..17.05%
BRY……..16.63%
Industry…16.33%
SM……....15.44%
GTE……...15.33%
SFY……...11.60%
PXP……...11.36%
CHK……...10.93%
COG……..10.53%
ROSE……10.02%
NXY…….....9.53%
APC……....8.28%
TLM…….....7.72%
LINE……....7.65%
RRC……....5.89%
SGY….…...1.74%
AAV…….-11.99%
MMR……-19.48%
ATPG…...-41.82%
IVAN…...-154.05%


Disclaimer: The source of my information is TD Waterhouse Market Research services as of December 6, 2010.

Click here to see similar information for TSX-listed companies. Note that some companies are cross-listed on the US and Canadian lists. Their numbers differ slightly because of the different accounting rules for each country.

Click here to see some information on three Canadian oil resource stocks with tremendous potential

Click here to learn how to trade the forex market


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An Excellent Oil Stock Picking Report

If you want to get a deep look into the what's really happening with energy markets and energy stocks in order to make great long term investments, I strongly recommend this report.

The editor of the report goes into detail about the cold flow heavy oil resource in Canada which has the potential to be extremely profitable at current oil prices. There are three resource companies that stand to profit substantially from cold flow heavy oil.

Click here to see this report on cold flow heavy oil

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Sunday, December 5, 2010

A Vacation Guide to Cuba

This is off-topic to my usual investment rants, but I figured everyone could use some time off and Cuba is a great place to do it! I wrote a lot of information about my personal experience in Cuba and you can read about it all here:

A Guide to Vacationing in Cuba
Getting the best deals for Vacations in Cuba
Partying it up in Cuba
Relaxing in Cuba
Getting through Cuban Customs



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Compton Petroleum Truly Confounds Me

I bought a lot then pushed the hell out of Compton Petroleum a couple months ago, namely on my Motley Fool Blog. The blog has become one of the most popular on the site but despite that and me being ranked 18th out of 70,000+ people on the site I have the opportunity to look like an ass again with one of my "locks". Last year I pushed Opti Canada big time and got dozens of people to follow me on the pick on the Motley Fool site. It pushed its way up 40% then crashed and is now sitting happily down 50%. Luckily I managed to sell that stock at $2+ so I saved myself from real life losses despite massive egg on my face for my e-self.

Now I have my new dog, Compton. This one is truly confounds me and I find it very annoying that any doofus that's a late bandwagon jumper onto the gold rush has made money while I am now down on this. Now that they have settled a major portion of their debt and are no longer distressed financially, there's only two arguments I see that are bearish on the stock.

1. It's a penny stock that doesn't trade on fundamentals. Well, what a stupid argument that is. First off, any bear using this argument admits that Compton is severely undervalued. Their main argument is that they think it'll remain severely undervalued in perpetuity for some reason. Secondly, Nortel and Microstrategy and the like all traded well over $200 in the tech bubble craze in 2000. They didn't trade on their fundamentals, but were well over $1, so does that mean we should have bought them?

2. Natural Gas prices will remain low in North America. While this is up for debate exactly how long natgas prices will remain at the bottom of its cycle, at least this is somewhat of a coherent argument.

I counter with my blog on the Compton's and other's fundamentals. Ignoring the obvious value seen in the Price to Book, Price to Sales and Price to Cash Flow metrics, we see that their profit margin is ONLY -2.5% at these low natural gas prices. Natgas prices don't need to rise very far before they start making money again and are only at the mercy of the FX markets to determine if they are profitable on their bottom line.

Analysts expected them to lose 6 cents this past quarter and they lost 2. Their expectation is a 4 cent loss next quarter so what will they do, breakeven maybe? People are greatly underestimating the leanness that the company is headed towards under the guidance of the new CEO. Look at the numbers I put together prior to Q3. Their margin was -14.6%, and now its -2.5%, mostly thanks to the cost savings because natgas prices did not do well in Q3 vs Q2. One day when natgas prices recover this company will be rolling in cash after they've restructured themselves.

Another consideration to take into account that I just touched on above is their debt is denominated in US dollars. While this is not an operational thing, as the USD declines, they'll make money based on the decline in value of their debt. In effect, they are currency traders "shorting" the USD. An aggressive decline on the USD next year could see Compton earning 10 or more cents. Then they'll own a 4th of the 5 categories in my fundamental analysis list if they remain under 50 cents.

What can I say? I have people on Motley Fool listening to me, I have people on Yahoo Finance posting my stuff to the CMT.to and CMZPF.pk boards and I even have a Kitchener-born, right-wing wannabe Afghani terrorist stealing all my picks. What I don't have are the goofs at Canaccord, RBC Dominion, Scotia Capital and the like supporting my pick. They should though since I am smarter than them. I know since I had an interview at Canaccord. I'm smart enough to be able to walk away from the prospect of working a 10-14 hour work day everyday. You don't need to be working that long to come up with the garbage recommendations that they toss out.

Incidentally, I give this blog about 24 hours before someone finds it and posts it on Yahoo Finance. I am sure there are some very eager people there to show that thing called cooper godfrey what an idiot he is for constantly saying that Compton is terrible because it doesn't trade on its fundamentals.

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Investing in Biotech and Pharmaceutical Companies

I'm not a member of the FDA nor am I an expert in the medical field, but I do use some common sense when it comes to trading biotech and pharmaceutical companies so if you're interested in what I have to say you can read my two articles about them:

Investing in Biotech and Pharmaceutical Companies
Investing in Beaten Down Biotech Stocks

I may not be an expert, but I was smart enough to know ARNA was not a good pick in August, and I am smart enough to know that it is probably a good pick from about now to February once tax loss season pressure subsides and it rises again a la SQNM of last year and early this year. Incidentally, I am a big fan of ETRM right now at this price. It's just a fraction of where it was last year, solved its finaning issues and Australia seems to love them so the US should follow. The Maestro system is brilliant compared to what VVUS or ARNA has out there especially with how wishy-washy the FDA is with both of their drugs. One day the market will realize that and ETRM will be a multi-bagger. I can see them challenging their highs from last year which post-reverse split is north of $30.

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The Penny Stock Newsletters Have Been Pushing Out Real Turds Lately

I have an article on another site How to Make Money on Penny Stocks where I go on to explain how you might win, lose or draw on following the advice of certain penny stock newsletters. Well I'm signed up to so many of these things the only one that stands out to me by name is StockRoach because at least its got a picture of that little Roachie guy accompanying each of their picks. The others kind of all melt together in my mind - Penny Stock Finder, something-something-Penny Stocks, Micro Stock Yada Yada etc.

Well anyways this week they had one thing in common for sure - a love fest with SOPV.ob. If you timed the stock JUST RIGHT you had a chance to make some cash on the rise from 36 to 46 cents. They must have hired some hot IR woman or something over there to be that popular.

The rest of the picks were even worse. You either can't trade them with your broker or you can't get the stock at the opening bell even if you submitted your limit order at the ask. My order sits there open when the stock is supposedly trading at the same price I'm requesting then it shoots up 10% or more several minutes after my order was submitted with it not being filled. At least before these guys gave their followers a fighting chance at making some money. Now they literally just want 100% bagholders buying at the market price.

I'm still signed up to all the free services just to know what's out there, but really you're better off going with some paid service to learn how to trade YRCW or DRYS with some TA if you can't come up with your own picks rather than the free services right now. If you click those links to each stock it'll lead you to their fundamentals which are piss poor for the both of them so you don't want to be buying them because of their incredible financial prospects, just their TA when it's good.

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Friday, December 3, 2010

A brilliant way to buy gold well below spot prices

The gold bandwagon is getting rather filled but there's a good chance that gold's going a lot higher. Still, its hard to lay down $1,400 an ounce for some physical gold. There is a pretty brilliant but straightforward and fairly well known way to buy gold low. It costs only $17 and you can save up to $700 for each ounce purchased at today's prices so I think its worth it.

Click here to find out how to buy gold cheaply


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Q3 Update for the Key Fundamental Statistics for the Oil and Gas Industry in Canada

Provided below are some of the Key Fundamental Statistics for the Oil and Gas Industry in Canada. These numbers are an update of my original article that can be referred to here. I recommend that you read that one to give this information some context. This article mainly focuses on producers or companies very near production and avoids the Income Trusts as they are valued much differently. Click here if you are interested in further in-depth analysis of the oil and gas sector.

The 25 TSX-listed companies included in this ranking are as follows:

Advantage Oil and Gas Ltd - AAV
Alange Energy Corp - ALE
Alberta OilSands - AOS
Bankers Petroleum Ltd - BNK
Canacol Energy Ltd - CNE
Canadian Natural Resources Ltd - CNQ
Compton Petroleum Corp - CMT
Connacher Oil and Gas Ltd - CLL
EnCana Corp - ECA
Gran Tierra Energy Inc - GTE
Ivanhoe Energy Inc - IE
Nexen Inc - NXY
Opti Canada Inc - OPC
Orleans Energy Ltd - OEX
Pacific Rubiales Energy Corp - PRE
PetroBakken Energy Ltd - PBN
Petrolifera Petroleum Ltd - PDP
Petrominerales Limitada - PMG
Questerre Energy Corp - QEC
Rock Energy Inc - RE
Strategic Oil & Gas Ltd - SOG
Talisman Energy Inc - TLM
Terra Energy Corporation - TT
Transglobe Energy Corp - TGL
Vero Energy Inc - VRO


Price to Earnings

ECA..........9.8
PMG........12.7
CNQ........17.5
NXY.........18.8
Industry...24.6
GTE.........32.7
TGL.........34.9
TLM.........41.3
PBN.........43.4
PRE.........98.6


Nothing much has changed for the Price to Earnings metric as most companies remain unprofitable. CLL has dropped off the list while PRE has positive earnings and thus joins it.


Price to Sales


CMT..........0.5
CLL ..........0.9
OPC.........1.0
PDP..........1.4
TT.............1.5
NXY..........1.8
ECA..........2.0
RE............2.6
VRO.........2.8
TLM..........3.0
OEX..........3.0
AAV..........3.3
PMG.........3.5
CNQ.........3.6
Industry...4.0
PBN.........4.4
GTE.........5.1
PRE.........5.7
TGL.........7.9
ALE.........9.8
BNK.......12.7
SOG.......14.6
CNE.......20.4
AOS.......20.6
QEC.......27.5
IE ..........31.4


Price to Book


CMT........0.1
OPC........0.2
PDP........0.4
CLL ........0.7
OEX........0.8
TT...........0.9
AAV........0.9
AOS........0.9
PBN........1.1
ECA........1.2
QEC........1.2
NXY.........1.3
RE...........1.4
VRO........1.4
ALE.........1.6
TLM.........1.8
CNQ.........2.1
IE ............2.1
GTE.........2.2
Industry...2.9
SOG .......2.9
PRE........4.3
BNK........4.9
TGL.........5.6
PMG........6.1
CNE........7.9


Price to Cash Flow


CMT...........2.6
TT..............3.8
NXY...........4.5
PDP...........4.7
TLM...........5.8
AAV..........5.9
VRO..........6.0
PBN..........6.2
RE............6.9
ECA..........7.1
CNQ..........7.1
GTE..........9.8
PMG.........9.8
OEX.........10.5
CLL .........11.4
Industry...11.5
PRE.........13.0
TGL..........24.7
BNK.........27.0

QEC drops off the Price to Cash Flow list while there is some shuffling at the top vs Q2 numbers. CMT still takes #1 spot as it does with the Price to Sales and Price to Book Value method, same as Q2. It will be interesting to see if CMT's stock price recovers to a level where its financial ratios imply that it should.


Profit Margin


PMG........23.76%
ECA........16.47%
CNQ........15.58%
NXY.........9.95%
PBN.........9.13%
Industry...6.37%
CLL .........6.26%
GTE.........5.31%
TT............0.03%
BNK........-0.23%
CMT........-2.53%
TGL.........-8.54%
TLM........-11.11%
PDP........-15.09%
RE..........-15.35%
PRE.......-24.03%
AAV.......-24.23%
VRO.......-31.92%
OEX.......-49.56%
QEC......-114.82%
ALE.......-138.51%
AOS......-150.25%
IE .........-159.65%
SOG......-170.42%
CNE......-209.05%
OPC......-212.85%

Disclaimer: The source of my information is TD Waterhouse Market Research services as of December 2, 2010. I own positions in Petrolifera Petroleum and Compton Petroleum.

Click here to see similar information for US-listed companies. Note that some companies are cross-listed on the US and Canadian lists. Their numbers differ slightly because of the different accounting rules for each country.

Click here to see some information on three Canadian oil resource stocks with tremendous potential

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Thursday, December 2, 2010

Top 100 Dividend paying stocks

For those interested in dividend paying stocks, I highly recommend this service. Instead of having to do the work myself, they automatically update the top 100 highest paying dividend stocks and have a lot of other information about international securities, REITs and have a list of stocks with upcoming dividend ex-dates so you can time your buys and sells to maximize your dividend payouts. Its a subscription service, but I find it worthwhile personally for $19 a month. You're not obligated to get the service every month either so you may choose to get it every so often whenever you feel you need it.

The best dividend stocks


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