Stock Talk – September, 2013

Stock Talk

John Day

John Day

What can you advise me about NTI, holding it now but it has declined recently?

Igor Greenwald

Igor Greenwald

Refining margins have been in freefall and refining stocks have followed suit, especially the smaller refiners without a Gulf Coast presence. At this point a lot of the bad news seems to be baked into the share prices, but value traps have consumed fortunes based on similar calculations. We prefer portfolio holdings MPC, TSO and HFC in the refining space.

David Daub

David Daub

I subscribe to several CIG (old KCI?) investment letters. In the “old” days, KCI covered stocks which, as far as stock price is concerned, made it possible for a blue collar worker (like I am) to do some shares purchasing. Now, stocks listed in you energy letter are, for a blue collar salary earner, “out of sight.” Inasmuch as CIG has the expert market analysts (which we “blues” don’t) can’t your CIG experts include some small cap (like in the teens) oil industry stocks with growth/dividend possibilities? Help!! Would appreciate your comment(s).

Igor Greenwald

Igor Greenwald

Thank you for subscribing. The truth is that the share price doesn’t have anythng to do with how “affordable” a stock is. You’re ultimately buying earnings, and it’s what you pay for those earnings (measured most simplistically by the price/earnings ratio) that determines veluation. For example: Chevron (CVX) at $125 a share is priced at just 10 times trailing earnings, while Oasis (OAS) at $43 a share has a p/e ratio of 22. Of course, Oasis is growing its earnings much faster, and there are other valuation considerations I haven’t touched on as well. Bottom line is that the higher-priced shares aren’t necessarily more expensive, and today it’s just as easy to buy 10 shares of a $125 stock as 100 shares of a $12 one. But please let me know if I misunderstood your question.

Mark Hays

Mark Hays

Wesport (WPRT) has fallen recently. How do you feel about the potential of this stock?

Igor Greenwald

Igor Greenwald

We’re significantly less bullish than we were before the price tanked, partly in response to a big secondary offering, and are doing further research, but it remains rated a Buy for now.

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