DEFEND DEFEND DEFEND!

About a couple months ago prior the oil crisis, I was speculating on the Aerospace and Defense sector. I compared a couple companies with each other and have 2 money making candidates that are indeed on the top of my list. My first and most comfortable position at the moment is in PPA. PPA is an ETF which is designed to have you vested in Aerospace & Defense. The sector has been extremely hot lately and I believe it’s going to continue climbing up. With Iran threatening the US & Israel PPA will keep you vested in the right amount of stocks to make you some money. PPA’s chart is absolutely amazing, look at the chart below.

 

 

 

 

Firstly, pay attention to the trend PPA is making. The stock is going up, people are selling for profit, and then again people are buying and selling for profit. So far it has recovered all it’s selling off quite quickly. Most investors think that the defense sector is over with, I think its just getting started. Unfortunately, with all the craziness in the world, the U.S. is worried on how they can protect themselves.

 

Another company which shook me was DRS. Here is what’s interesting – In 2005, the stock closed at $51.39 there was not once a piece of news that hinted the contracts that DRS were getting. Now let’s look at DRS in 2006

 

· DRS Technologies Receives $34 Million in New Contracts to Provide Power Equipment for U.S. Navy Ships and Submarines
Business Wire (Mon, Feb 27)

 

· DRS Technologies Receives $22 Million in Orders for Advanced Intelligence Equipment
Business Wire (Thu, Mar 16)

 

· DRS Technologies Receives $15 Million in New Orders for Thermal Imaging Systems for Marine Corps Abrams Tanks
Business Wire (Fri, Mar 17)

 

· DRS Technologies Awarded $139 Million Contract to Upgrade Fire Control System of U.S. Army Bradley Combat System
Business Wire (Tue, Mar 21)

 

· DRS Technologies Gets $139M Army Pact
AP (Tue, Mar 21)

 

· DRS Technologies Receives $11 Million in New Orders to Provide Logistics Support for U.S. Air Force Tunner Loaders
Business Wire (Wed, Mar 22)

 

· DRS Technologies Receives $9 Million Order to Refurbish Military Trailers Deployed in Operation Iraqi Freedom
Business Wire (Thu, Mar 23)

 

· DRS Technologies Receives $26 Million Contract to Provide Key Subsystems for U.S. Army Long Range Advanced Surveillance Systems
Business Wire (Thu, Apr 20)

 

· DRS Technologies Awarded $142 Million Contract to Produce International Naval Infrared Search and Track Systems
Business Wire (Fri, Apr 21)

 

· DRS Technologies wins $142 mln navy contract
at Reuters (Fri, Apr 21)

 

· DRS Technologies Receives $34 Million Contract to Provide Embedded Diagnostics Systems for U.S. Army Combat Vehicles
Business Wire (Mon, Apr 24)

 

· DRS Technologies Receives $222 Million U.S. Army Contract to Provide Communications Services for Multi-National Forces in Iraq
Business Wire (Tue, Apr 25)

 

· DRS Technologies Gets $222M Army Pact
AP (Tue, Apr 25)

 

· DRS Technologies Receives $18 Million Order to Refurbish Military Trailers Deployed in Operation Iraqi Freedom
Business Wire (Wed, Apr 26)

 

· DRS Technologies Awarded $21 Million in New Orders to Produce Driver Vision Enhancers for U.S. Army Vehicles
Business Wire (Thu, Apr 27)

 

· DRS Technologies Receives $20 Million Contract to Provide Electronics Test Support for U.S. Army Ground Vehicles
Business Wire (Fri, Apr 28)

 

That’s a total of $1,216,000,000.00 in just 4 months! I THINK IM BLOWN OUT! All I have to say is GO DRS! May 11^th is earnings day.

MSFT is a go!

Friday, MSFT reported some nasty earnings which disappointed lots of investors. The volume was absolutely remarkable; almost 500,000,000 shares were traded that day, with the stock closing with an 11% loss.

 

My entry price: $24.24

I’m going to make this short and sweet. Buy Microsoft! There is one important lesson to be learned here; do not underestimate the big boys. Underneath this 11% loss, there is an enormous software giant. This is a company with an EPS waiting to explode as soon as their products are released. Microsoft delayed the Vista operating system as well as some other Office products releases earlier this year. Take a look at the chart below.

(Courtesy of Yahoo!)

2 Points I want to make about Microsoft:

 

1) Microsoft is so big and full of free cash, that interest rates do not affect them like other companies. Normally we see the spur in Large Cap when interest rates go up because investors like to stay on the ‘safe’ side of things and earn their Yield and smaller EPS. Since interest rates are up, this stock should be up because investors want to run away from the smaller companies which will have a tough time meeting their EPS. But look! MSFT is being discounted rather than being rewarded!

2) Are we forgetting who Microsoft is? Microsoft is the largest software supplier in the world. Almost everyone out there uses the Windows operating system, making it almost an ‘industry standard’. With Vista & XBOX being released I cannot see how Microsoft will not recover this 11% loss in the next few months, in fact I predict this stock being in the mid 30’s in 2007 which is only 8 months away. From there it’s “ride the bull” time till the end!

Cheers!
Josh

Why oil will dominate in 2006

So we’ve all heard the news, the barrel has hit an all time record of $73, but why? Some people suggest insufficient resources, lack of product, demand, addiction, but what is really driving the price? What is really causing the horrifying transaction at the pump? In this article I want to cover some ground which will educate you somewhat on what I think can make you money, and save you at the pump.

 

 

The answers to these questions have multiple ones, however, one of them dominates – this is Iran. Iran, as silent as it seemed to be only 6 months ago, has had a tremendous impact on the United States not only currently, but in the past as well. In my opinion, Iran will continue to pursue their nuclear program and do “whatever it takes” to complete their mission in bringing a “safe nuclear program” to their homeland. Now if you asked me, I don’t believe a single word their president says, he is very fanatical and wishes death to the wrong people. Now you are asking; “why in the world would Iran drive the price up? They are only providing 10% of the oil to the world, which makes it what 2% to United States?” Let us first understand why oil is so important.

 

1) Oil is not renewable. Although there are other sorts of mechanical instruments (hybrid cars) that will run on electricity, the main source and most widely used is still oil.

 

2) United States is not an “oil-rich” country. Yes of course there is oil in Alaska, but we're years from seeing it. I firmly believe the United States is trying to take the upper hand and finish the oil in the Mid-East, so in years from now, they can rely on our oil, by then the price would be entirely ridiculous.

 

3) Oil will not die. No matter how many new items come out from the dark, from hybrids, & electric to hydrogen and solar; oil will still be in the play for years. The price will always continue to increase since basic supply and demand rules will apply.

 

 

So we’ve clarified that, we know that no matter what any president says or what any manufacture decides to do, we will still depend on oil.

Today, President Bush has commented and firmly supported the production of hydrogen cars, and has ordered to cut back on the purchase of oil for the United States reserves. The price of course will get investors to dump for a profit with fear that the demand will come down which will ultimately drive the price cheaper. However, this is a temporary “fix” that you must act on and get in while it’s cheap! If the barrel ever hits the light of $68-$70, which it may in the next week depending on what happens with Iran, I could use a little bit of stock (I’ll tip you later on in this article). But now its time to show you exactly what effect Iran has on the oil production in this world and why I think it’s going to $100+ a barrel.

 

(Courtesy of Wikipedia.com)

 

 

 

 

Each of these numbers has a meaning to them, to see a full list please visit http://tinyurl.com/an4fj. I’m going to list some of the points that have driven the price up starting in the 1973 Oil Crisis.

October 17, 1973, (OPEC Organization of Arab Petroleum Exporting Countries) decided to no longer ship any petroleum to the countries that supported Israel in the ongoing Yom Kippur war. This spiked the prices of the barrel to what was then an “unbelievable” price, but the American’s still paid for what was necessary.

 

Looking at the chart, here’s what has got the price up from Iran’s pressure.

 

$4 Oil embargo begins (October 19-20, 1973)

 

$6 Oil embargo ends (March 18, 1974) (notice how there was little price change, and the barrel stayed rather high)

Here is what the KEY point is:

• 11 – Iranian oil production hits a 27-year low
• 13 – Iranian Revolution; Shah deposed
• 17 – Iran takes hostages; President Carter halts imports from Iran; Iran cancels US contracts; Non-OPEC output hits 17.0 million b/d
• 20 – Kuwait, Iran, and Libya production cuts drop OPEC oil production to 27 million b/d
• 23 – First major fighting in Iran-Iraq War

 

From points 11 to 23, there was a 160% increase in oil only due to the Iranians’ actions.

 

Now lets say this happens again, Iran decides to cut OPEC output because they are supporting the US, which will be the case, history repeats itself doesn’t it? If that’s the case, 160% increase would take the barrel to roughly $182! There is no doubt in my mind that Iran will try and pull something like that to make our lives more miserable in order to complete their nuclear program.

 

This is why I believe we are at threat. So what am I going to do about it? How am I going to protect myself? I’m going to take advantage of this ‘low’ price and use it to make money. I’m going to be very bullish on OXY (Occidental Petroleum), XOM (ExxonMobil), and of course USO (United State Oil Services). No matter what happens, these particular stocks/ETFs will continue to grow as they are the strongest energy companies I’ve traded. I refuse to pay $4-$5 / Gal of gas without any reimbursement of some sort. Instead I will sit on my chair and watch oil go up as Iran will continue to threaten the world with their inhuman acts. Check up on both OXY and XOM, I personally have bought OXY at $89 and will continue to hold once this entire crisis is over and I sense a drop. What you can do, is do your research on both and take this article into consideration, as time ticks you can protect yourself from the high prices gas prices, and add an extra buck to your wallet!

 

Take these rules with you!

 

Be sure to shop around for gas, don’t be fooled by the octane grades as it has no true effect on your car; fill the cheapest grade!

 

Don’t pay attention to rumors telling you that Arco or some unknown company mixes their gas with garbage additives, this is nonsense! These companies are cheaper since they do not have to pay for expensive franchise fees; I personally fill up at Velaro.

 

Make sure your tire pressure is correct; otherwise you will be losing 4-5 miles per a gallon believe it or not!

 

Use a “cashback” card; I actually save 0.15 per gal when I fill with my Chase card.

 

Get rid of all the heavy, unnecessary items that may weigh your car, trust me you notice a difference.

 

Carpool when you can J

 

Hopefully this article will bring some light.

 

Cheers!

 

Josh

 

 

 

 

 

 

Welcome.

Welcome to my blog. I decided to start my own blog of my own market news and tips. I've been a day trader for a several years now and thought it would be nice to share my thoughts with the world. I guess my goal is to make all the rookies some $$!

Enjoy!

Josh