Posts Tagged ‘coal’

Energy Buzz Stocks- JCI, ACI, CVA

Friday, January 16th, 2009

In no particular order:

1. Coal makes a comeback: Formed from the compressed plant matter trapped under rocks and dirt for millions of years, coal accounted for about 27 percent of the world’s energy consumption, and is expected to increase by 2.6 percent every year until 2015. It’s cheap, and a lot more available in countries with voracious appetites for energylike the U.S., India, and China. Kiplinger recently published an article hailing coal as the “new black gold,” that will be touted as a “homegrown solution to ease U.S. reliance on oil imports, which now account for nearly two-thirds of daily usage.” Coal-to-fuel technologies are all but here, and it’s only a matter of time before the treehuggers get on the coal bandwagon, as well.

2. Russia gets the cold shoulder from the EU: About 39 percent of the European Union’s natural gas imports come from Russia. The demand for natural gas is expected to increase about 1 percent per-year for OECD countries, and 2.3% for non-OECD countries. Russia knows that it can call the shots when it comes to price from western and central European countries, once business from China picks up. Expect the EU to continue to launch new initiatives aimed at reducing its dependent on Russia including pipelines, and LNG re-gasification terminals to serve as a more reliable substitute for future natural gas supplies.

3. Oil prices stabilize within a narrow band by the end of the year: High oil prices that were buoyed for so long by bottlenecks, a bigger appetite, and speculation, has resulted in lower demand in OECD countries, especially the United States. Market researcher, Global Information, Inc., recently issued a statement predicting lower prices in the short-term, and further efforts by OPEC, which accounts for roughly 40% of the total oil production, to further try and control supply and reduce production.

Here are a few Energy Buzz Stocks we’re keeping an eye on:

Johnson Controls (JCI)
: This clean energy company just signed a joint venture with Saft to produce batteries for hybrid and electric vehicles. Known for its energy saving technology, which has applications in everything from the automotive to the industrial sector, JCI could be a big winner in the coming year.

Arch Coal (NYSE: ACI) – The stock has been crushed lately, and trades near its 52-week low. The company’s Q3 profit tripled over last year, and management was bullish on the long-term fundamental strength of the coal market. Recently trading for about $16.50 a share, ACI seems like a great opportunity at this price.

Covanta Holdings (NYSE: CVA)– Do you remember how the Flux Capacitor worked after Doc Brown flew back to 1985 from the future? Well, the future is here. This company can burn garbage instead of fossil fuels to produce electricity–clean electricity. Their waste-to-energy technology reduces greenhouse gases, lowers the risk of groundwater contamination, and reduces dependence on fossil fuels. Every year, Covanta converts 16 million tons of waste into 8 million megawatt hours of clean, renewable electricity. The company has had quarterly earnings growth of about 29 percent, and has more than $169 million of cash on hand.