Energy stocks are on fire
With Syria about to be on the receiving end of a Tomahawk missile strike, a surge in crude oil is pushing up the sector.
All eyes are on the West's naval assets in the Mediterranean as we await a cruise missile strike on Syria in response to the Assad regime's horrific chemical weapons attack.
Wall Street is already responding to fears sectarian violence will spill over into Iraq and other key oil-producing regions. West Texas Intermediate is trading above $110 a barrel, a level seen briefly over the last few years, and is only a hop-skip-and-a-jump away from the $115 peak hit in 2011.
Of course, a surge of inflation now would be bad, bad news since it would force central banks to lay off the stimulus, would damage consumer confidence, and would threaten a nascent reacceleration in the global economy.
But for now, there is money to be made as the rise in oil prices boosts energy stocks in a big way.
Just look at the way the Energy Sector SPDR (XLE) is enjoying a surge of relative performance against the S&P 500 on a scale not seen since way back in January. Big mega-cap names are participating, including Exxon Mobil (XOM) and Chevron (CVX).
But the real action, in my mind, are in the smaller, fast moving stocks that provide an opportunity for nimble traders to get in, grab a quick profit, and get out before the negative consequences of higher oil prices are discounted.
There is a reason that oil above $110 a barrel hasn't been sustained when it happened in 2011 and again in 2012: The economy and the stock market are still far too dependent on cheap money stimulus from central banks.
Low inflation is the lynchpin holding this jalopy together. Without it, investors would panic. Just look the reaction since the Federal Reserve started talking about merely slowing its pace of stimulus (not stopping it, and far from actually removing stimulus) back in May. Interest rates have surged. The market has oscillated. Investors have doubled their daily antacid dosage.
I'm recommending clients consider two names. The first is Hyperdynamics (HDY), and independent oil and gas company that operates off the coast of Guinea in West Africa. Shares have been building a base of support near current levels for two years, and are poised for an upside breakout as price move above the 200-day moving average.
The other is Sonde Resources (SOQ), a more speculative play that operates in Western Canada and off the coast of Tunisia in North Africa. Shares have been in a persistent downtrend since January, but are now enjoying a surge of buying interest on very strong volume. A similar breakout late last year took shares as high as $1.90 a share. A return to that level would be worth a 100%+ gain from here.
I've added both SOQ and HDY to my Edge Letter Sample Portfolio.
Disclosure: Anthony has recommended SOQ and HDY to his clients.
Check out Anthony's new investment newsletter, the Edge, and his money management service, Mirhaydari Capital Management. A two-week free trial has been extended to MSN Money readers. Click the link above to sign up. Mirhaydari can be contacted at firstname.lastname@example.org and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.
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1) Consumer confidence is at 0%
2) The 99% have taken 99% of the financial burden since 2008/2009
3) The 99% have supported dictators in the Middle East and Central America for decades via our Government and what have we to show for it - HIGHER PRICES FOR OIL and everything else
4) The 99% has 0% FAITH in our elected officials
5) Only cure for all this mess - A SECOND AMERICAN REVOLUTION!
If we only had a government.
Take money from people that pay taxes for THIS country to spend it on people who hate our guts and get nothing in return.
Let the middle east pay our politicians. Hell they do more for them at our sacrifice. All a F'N SCAM!!!!!
A war in Syria means inflation at the gas pump and higher government costs. If Obama had a responsible energy policy we would not have to be involved.
Foreign Policies: Have we all forgotten about Enron
Isn't it funny how that Exxon, Mobil and Chevron are the same people that control
foreign policies in the Middle East for the U.S.
Sorry but I don't call up 2% on fire. Get real. When they are up 20% then lets talk. Most oil companies are running a P/E in the 10's and dont go up much while you have a company like Tesla that is really on fire up 300% or more for the year with a 200 P/E which is unreal.
Yes this would be true after oil prices jump up everyone knows people have to pay more in electric..
The price of Oil is HARDLY at an ALL-TIME HIGH....Put that FALLACY to rest.
We have been attempting DIPLOMACY with Assad's Regime for well over a year, also working with allies of his Regime....Put that FALLACY to rest. Isn't the word REGIME all telling ?
I don't think we get any Energy products from Syria..? Someone else can prove that FALLACY.
I don't think "American Oil Companies" are members of OPEC...Maybe another FALLACY?
Do many of you blow shidt and lies without checking any kind of FACTS, how are you credible ?
O.P.E.C....Oil Producing Exporting Countries...
Gathered "some" of this from Wikipedia....But Wiki admits, some of recent info may be incorrect..
Doing this for enlightenment of "some."
Founded in about 1960, With Venezuela and Iran, bringing on board Iraq, Saudi Arabia and Kuwait.
BTW...Venezuela is the "only" Country in Western Hemisphere that belongs to OPEC.
Today there are roughly 12 Member Nations; Headquartered in Vienna, Austria.
NO actual "Oil Companies" belong to OPEC. (although some may be Nationalised)
And certainly "no American Oil Companies."
GLAD TO HELP....
why are we being screwed again and again when we will take over all producing ranks in the world number one, USA OIL COMPANIES NEED TO GET OUT OF OPEC AND QUIT SCREWING US
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