Bullish on Earnings

Earnings season kicks off today with Alcoa (NYSE:AA) after the closing bell. Alcoa is certain to beat expectations. And from what I’m hearing, year over year comps should make for some positive looking earnings numbers for many companies.
That’s because the Fourth Quarter of 2008 was a pretty dismal quarter, with the S&P 500 reporting $5.50 in per-share earnings. Earnings from the Fourth Quarter of 2009 should come in somewhere around $17 per share. That’s clearly a lot better.
*****Oil is pushing past $83 a barrel after China reported a 21% increase in oil imports during the fourth quarter. That’s a huge jump, and serves as a perfect counter-point to the analysts who have been saying that supply and demand fundamentals don’t support the current price for oil.
The problem seems to be that some analysts only look at the supply and demand numbers for the U.S. And even then, they seem to be fixated on inventory numbers. That’s simply not enough information.
Oil is a global commodity. And while the U.S. may be the biggest user, the most growth in oil consumption comes from emerging markets, like China. If you simply ignore China and the fact that global production is falling, it’s easy to come to the mistaken conclusion that oil prices should be lower.
*****As oil prices rise, it makes other energy sources more valuable, too. Alternative energy stocks rise with oil prices. And we’ve seen natural gas prices rally from an important bottom in recent weeks.
Coal is another energy source that’s becoming more valuable as oil prices rise.
With carbon emission caps looming in the U.S. and a global debate on curbing carbon emissions that most recently landed in Copenhagen, many investors have turned their back on coal. But that could be a mistake.
In the words of energy economist Gregor Macdonald, the strategy for global climate legislation is this:
“…the optimal approach politically to carbon reduction is to: 1) enter into weak agreements, and then 2) not adhere. That’s exactly what I expect in the next decade, as the Era of Coal 2.0 unfolds.”
Gregor is quite bullish on coal. Not only is it important for emerging markets, but as a transition energy source. Gregor believes that higher oil prices are creating more demand for public transportation, like trains. Commuter trains run on electricity, and many power plants are coal fueled.
Now, as you may know, energy economist Gregor Macdonald is the voice of my Energy World Profits advisory service. I make the investment recommendations. And we just added a coal stock from China that’s in a great position to see a massive surge in revenues, profits and share price…
You see, for safety reasons, China’s government is forcing consolidation of the coal industry. And the stock I recently recommended has been hand-picked to acquire mines and add to its capacity.
In my opinion, the Chinese government is virtually guaranteeing a profit for investors who buy this stock. I think this stock will double in the next 12 months. To learn more about this stock, and to find out how Energy World Profits has put up 102%, 85%, 43% and 35% since October, click HERE.
*****Did any Daily Profit readers get in my latest recommendation for Maguire Properties (NYSE:MPG)? Readers could have doubled their money the first time I recommended this stock. And my latest recommendation is up 26% in just a few weeks. Let me know at [email protected].