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The Money Map Advantage
Thursday, July 28, 2005
By Horacio Marquez
#2
** Energy, Energy, Energy Once More…
We started on the right track with our first pick: Westmoreland Coal (AMEX: WLB). It is up about 10.5% since our recommendation. And there is more to come ahead. Why? Because Congress, after many years of failing to address our energy policy, has finally decided to do so with a bill that was approved today and is coming up to the Senate floor tomorrow.
And the bill is comprehensive, including some $14.5 billion in subsidies to many types of alternative energy sources: $9 billion for clean coal, oil and gas and electricity companies, and the rest for nuclear, natural gas and wind, and to almost double U.S. ethanol use, to reduce our dependency on imported oil. Coal is the big winner, with large incentives to cut pollution from coal-fired electricity plants.
So, our bullish stance for gas, oil (emerging market oil companies), oil service, uranium and coal stocks are being rewarded by policy-makers.
We are also being helped by a flying market, thanks to good economic numbers (durable goods, housing and a probably outperforming GDP number this Friday).
So, how do we add to this bonanza? I reviewed the Money Map System’s picks to see which companies in these sectors appear to be a better value to own and enjoy a nice run-up. And I found a special situation in Brazil: Petroleo Brasileiro (NYSE: PBR), the premier Brazilian integrated oil and gas company.
Why Brazil? Brazil is one of the BRICs (Brazil, Russia, India and China), which are the countries posed to enjoy superlative growth in the decades to come and become leading economic powerhouses. Check out the paper by Goldman Sachs on the BRICs at:
http://www.gs.com/insight/research/reports/99.pdf
In addition, this is a good time to buy Brazil, for several reasons:
o The country is expected to grow some 3.4% this year.
o Brazil is going into its presidential election cycle, which is very good for stocks.
o There has been a political scandal around key figures of the President’s party, many of which had to resign. I strongly believe that the President is being isolated from the scandal by others taking the blame for it, and he will be reelected. This situation has created a discount on Brazilian stocks, and this discount is disappearing as others realize that President Lula’s chances of survival improve rapidly.
Hence, PBR is trading at a paltry P/E of 8, which represents a deep discount for this mammoth company in one of the most dynamic countries in the world.
**Action to Take***
Buy Petroleo Brasileiro (NYSE: PBR) at $52.82 or better. And place a sell stop at $42.23 for protection. For the aggressive investors, buy the October $50 calls (PBR JJ) at no more than $5.
Enjoy and profit,
Horacio Marquez
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com , or Mt. Vernon Publishing at 888.384.8339 or 410.230.1200.
Stock
Current Price
Comments
Westmoreland Coal (AMEX: WLB)
$27.57
Buy. Sell stop is $20.20.
Petroleo Brasileiro (NYSE: PBR)
New
Buy at $52.82 or better. Place a sell stop at $42.23.
Copyright – 2005 Mount Vernon Publishing. Mount Vernon Publishing does not act as an investment advisor or advocate the purchase or sale of any security or investment. Mount Vernon Publishing expressly forbids its writers from having a financial interest in any security recommended to its readers. All of our employees and agents must wait 24 hours after an Internet publication prior to following an initial recommendation. And for hard-copy-only publications, 72 hours after the publication is mailed. Investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Mount Vernon Publishing provides its members with unique opportunities to build and protect wealth, globally, under all market conditions. The executive staff, research department and editors who contribute to recommendations are proud of the reputation Mount Vernon Publishing has built since its inception in 1984. We believe the advice presented to its members in our published resources and at our meetings and seminars is the best and most useful available to global investors today. The recommendations and analysis presented to members is for the exclusive use of members. Copying or disseminating any information published by Mount Vernon Publishing, electronic or otherwise is strictly prohibited. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time.
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