11/25/2005 12:00 am EST
"Yes, it's disturbing to watch our resource stocks get pummeled," says Eric Roseman. "But this is the best buying opportunity for energy stocks in almost 18 months." Here, he reviews some recent "battered buys" as well as a new favorite in the sector.
"The primary trend remains very bullish for commodities, especially energy and the precious metals. That's why I'm urging everyone to snap up cheaper stocks now at these lower levels. This is the time to buy. We've got tight supplies and seasonal demand approaching in the Northeast, which should spike heating oil prices quite nicely. We expect that dips below $60 will prove to be only temporary. This steep corrective cycle will pass very shortly. Meanwhile, our favorite Canadian energy stocks have been battered stocks are primed for a massive rally. Twelve months from now, I fully expect each of these stocks to trade at least 50% higher.
"ARC Energy Trust (CA:AET.UN Toronto) is Canada's best managed energy trust. The company just announced another increase of their monthly distribution, and I strongly adhere to my 12-month forecast of at least a 25% total return and probably 50% by November 2006. The trust reported spectacular third quarter earnings; ARC reported net income of 195% or C$0.61 cents per share compared to C$0.21 cents a year earlier. Cash flow rocketed 52% over the quarter and has risen 27% for the company's first nine months. ARC is just an incredible money-making machine in the booming Alberta province. Buy up to C$24.50; I can't think of a better buy anywhere in Canada now.
" Do you remember UTS Energy (CA:UTS Toronto)? This small-cap Canadian oil sands play was purchased by Petro-Canada in March. That set-off a massive triple-digit rally. But in October's correction, UTS has fallen 11% and is now down 20% from its all-time high. The Alberta tar sands are home to Canada's future energy supplies and I urge every member to make sure they have a chunk of small-cap producer UTS Energy. When the stock rebounds, it won't be 5% or 10%; this little rocket will gain another 25% or more in just days. Buy UTS Energy up to C$4.55. There aren't many ways to play the great oil-sands theme. Only a handful of stocks are available in Canada and UTS offers this kind of best potential. Buy up to C$5.00.
"Based in Vancouver, Pacific Northern Gas (CA:PNG Toronto) is a real value play following a series of bearish news, bad earnings, and even a credit downgrade. It's a fantastic story that also promises a big profit over the next year as the bargain hunters return en masse to the energy complex. This is a small-cap company that owns and operates natural gas transmissions and distribution systems. I've been tracking PNG for months, and avoided the stock all year until I recently saw a marked improvement in its earnings last week. For value and growth investors Pacific Northern is a steal. It trades at 11 times trailing earnings and pays an effective 4.6% dividend yield. I think this is a hidden gem."