by Steve McDonald, Bond Strategist, The Oxford Club
Friday, November 23, 2012
In focus this week; natural gas is getting bigger quietly, pot is becoming a big business and the sitfa
Last week the CEO of Royal Dutch Shell (NYSE: RDS.A) was all about natural gas.
Peter Voser said in a meeting in New York that gas is nowas important to Shell as crude and China may be able to produce as much shale gas as the United States.
He also stated that the U.S. would be more than capable ofexporting natural gas and that North American vehicles will shift from gasoline to natural gasmuch sooner than most realize.
But the amount of money Shell will be investing in into natural gas development, in as little as three years, was the real news.
In addition to the billions it has already spent, Shell will spend another $20 billion on natural gas development in the next three years just to keep up with demand.
Gas production has taken a back seat to the election and fiscal cliff have stolen the main stage in this country, but the rest of the world is still focused on how we will heat our homes, fuel our cars and run our industries.
Gas is the future of energy, at least for the next 50 to 100 years, and Shell is one of the lesser known but primary gas players.
The CEO has a firm grasp on the direction of the energy industry and is steering Shell into the richest part of its future. Its stock looks undervalued, having lagged the S&P so far this year. Compared to other large cap international peers this one has been under the radar, a position the CEO likes, and it looks like a buy.
Pot is a Booming Business
Some of you might remember the segment I did last year about the Canny Bus, a west coast business that provided free delivery of medical marijuana. Well, since then pot has become a much bigger business.
Medbox (OTC: MDBX), a company I mentioned in the same article, ran up 3000% percent after a story about the stock was run in MarketWatch.
The company’s response to the huge move; chill out!
The company makes vending machines that distribute pot to patients, yes, you heard me correctly, patients. In my college days they were called other things.
The CEO said the run up was not due to any economic factor but attributed it to a lack of float. I’m sure it was not the CEO who released the official response of, chill out! It might have been a current patient.
But as much as I like to joke about the legal pot business, this industry is really heating up.
MarketWatch also ran an article about investing in associated industries that don’t actually grow or sell the weed, to patients. I can’t help myself.
Hydroponics for indoor growing, labs that test for the purity of the medicine, methods of using pot without smoking it, there is also real medicine made from pot to help with the fight against AIDS and cancer, and hand held loose leaf vaporizers.
I think that’s a digital water pipe?
Some of the company names listed in the article:
- GW Pharmaceuticals (OTC: GWPRF)
- Medical Marijuana (OTC: MJNA)
- Cannabis Science (OTC: CBIS)
- Terra Tech (OTC: TRTC)
Now you and I both know this whole medical marijuana thing is 95% pot smoking and 5% medical applications. There really are some medical uses for pot, but come on man!
But, whether its legal pot for consumption or real medical applications, this is catching on and there is opportunity here.
Medical pot companies listed on the stock exchange. What’s next? Cocaine for those sluggish Monday mornings?
And now the SITFA
I’m getting a little tired of some of the articles in our industry, money related articles that provide no usable information.
Case in point, a MarketWatch article last week whose headline read, “Double your Retirement Income in Five Years.”
Now that was something I wanted to read. Wow,was I wrong.
The ideas that will double your income in retirement, and remember someone was actually paid to write this; save more and work longer.
That’s it! Work five more years, save more during that time and don’t take any social security until you have to.
I’m not sure what bothers me more, the folks who wrote and edited this piece that thought it was useful enough to publish, or the people who didn’t already know it.
Work longer and save more. Oh, boy! Another cheek smacker!