As 2013 comes to an end, oil prices and natural gas prices have surged due to demand and extremely cold weather across the nation. With exploration and production (E&P) companies hitting all-time usage levels in the major shale plays around the country, the top oil field services names may be poised to have an outstanding 2014.
In a new research report, the oil services analysts at Deutsche Bank are clearly very positive on the sector for next year. Although, the market has been negative to energy stocks as fears of weakening U.S. oil prices remain pervasive, the outlook for activity next year continues to improve. The Deutsche Bank team continues to think North American leverage will outperform next year, but fighting sentiment is a losing battle at the moment. So they are focused on stocks with events and catalysts for 2014.
Here are the seven top stocks in the sector to buy for 2014 from Deutsche Bank. The first four are the high conviction stocks to buy and have among the highest price targets on Wall Street.
Hot Industrial Conglomerate Stocks For 2015: Acme United Corp (ACU)
Acme United Corporation, incorporated in 1882, is a worldwide supplier of cutting, measuring and safety products to the school, home, office, hardware and industrial markets. It markets and sells under five main brands - Westcott, Clauss, Camillus, PhysiciansCare and Pac-Kit. The Company has grouped its operations into three segments based on the Company's geographical organization and structure: United States, which includes its Asian operations; Canada and Europe. On February 28, 2011, the Company purchased all of the assets of The Pac-Kit Safety Equipment Company, which is a manufacturer of first aid kits for the industrial, safety, transportation and marine markets. In June 2012, the Company acquired selected assets of The C-Thru Ruler Company. In August 2013, the Company purchased a manufacturing and distribution center in Rocky Mount, North Carolina.
The Company's operations are in the United States, Canada, Europe (located in Germany) and Asia (located in Hong Kong and China). The operations in the United States, Canada and Europe are primarily engaged in product development, marketing, sales, administrative and distribution activities. The operations in Asia consist of sourcing, product development, production planning, quality control and sales activities.
Cutting
Principal products within the cutting device category are scissors, shears, guillotine paper trimmers, rotary paper trimmers, rotary cutters, knives, hobby knives and blades, utility knives, pruners, loppers, saws, manicure products, medical cutting instruments and pencil sharpeners. During the year ended December 31, 2011, products introduced included an expanded line of heavy duty school and office iPoint pencil sharpeners. Other recent product introductions included Westcott TrimAir paper trimmers with patented titanium coating and a blade change system for rotary and personal trimmers, Westcott Ultra Soft Handle scissors with anti-microbial product protection, True Professional sewing shear! s, as well as a line of iPoint pencil sharpeners utilizing the Company's non-stick coating. The Company also added to its KleenEarth family of recycled products by modifying the production process to allow for multi-colored products as opposed to the traditional black. During 2011, Clauss introduced the AirShoc line of titanium coated non stick garden tools.
Measuring
Principal products within the measuring instrument category are rulers, and math tools. During 2011, product introductions included Westcott branded compasses, protractors, rulers and math kits with anti-microbial product protection.
Safety
Principal products within the safety product category are first aid kits, personal protection products and over-the-counter medication refills. The Company markets these products under the PhysiciansCare brand.
The Company competes with Fiskars Corporation, Helix International Ltd. and Johnson and Johnson.
Advisors' Opinion:- [By Bristol Voss]
Acme United (NYSE: ACU) is a global supplier of cutting, measuring and safety products to consumer and industrial markets. It has neatly tracked the S&P small-cap index and shown the least volatility of the three stocks. While its $43.7 million market cap is the lowest of the three, its nearly $14 share price is the highest. It has a forward P/E of 9.2, and its dividend yield is the best of the three at 2.3%. In its most recent quarter, Acme posted a 7% increase in net income and a 3% rise in earnings.
Hot Oil Service Companies To Own In Right Now: NAPCO Security Technologies Inc.(NSSC)
Napco Security Technologies, Inc., together with its subsidiaries, manufactures and sells security products for intrusion, fire, video, wireless, access control, and door locking systems. The company offers intrusion and fire alarms, building access control systems, and electronic locking devices for commercial, residential, institutional, industrial, and governmental applications. Its access control systems comprise identification readers, control panel, personal computer-based computer, and electronically activated door-locking devices; alarm systems include automatic communicators, control panels, combination control panels/digital communicators and digital keypad systems, door security devices, fire alarm control panels, and area detectors; and video surveillance systems consists of video cameras, control panel, and video monitor or personal computer. The company also markets peripheral and related equipment manufactured by other companies. It sells and markets its pro ducts to independent distributors, dealers, and installers of security equipment worldwide. The company was formerly known as NAPCO Security Systems, Inc. and changed its name to Napco Security Technologies, Inc. in January 2009. Napco Security Technologies, Inc. was founded in 1969 and is headquartered in Amityville, New York.
Advisors' Opinion:- [By Jim Powell]
A more speculative idea, and a companion stock to ADT, I recommend Napco Security Technologies (NSSC). The company supplies security systems, primarily to commercial, institutional, industrial, and government customers.
Hot Oil Service Companies To Own In Right Now: Ishares Trust S & P Global (IXC)
iShares S&P Global Energy Sector Index Fund (the Fund) seeks investment results that correspond generally to the price and yield performance of the Standard & Poor�� Global Energy Sector Index (the Index). The Index is a subset of the Standard & Poor�� Global 1200 Index, and measures the performance of companies that Standard & Poor�� deems to be part of the energy sector. Component companies in the Index include those engaged in oil equipment and services, oil exploration and production, and oil refineries.
The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. The Fund�� investment advisor is Barclays Global Fund Advisors.
Advisors' Opinion:- [By Benjamin Shepherd]
So far, 2014 has been a year of heightened geopolitical risk. Russia has annexed the Crimea region of Ukraine, Syria remains embroiled in a civil war, political protests continue in Egypt and Turkey, and North Korea has once again fired missiles into the sea to protest joint US-South Korea military exercises.
Earlier this month, the managing director of the International Monetary Fund, Christine Lagarde, pointed to these simmering geopolitical tensions as an impediment to global economic growth.
Geopolitical risk can affect a variety of asset classes, ranging from energy and gold to bonds and equities. In the energy space, Brent crude, essentially the equivalent of West Texas Intermediate (WTI), traded above $109 a barrel thanks to worries that Russia might make a play for more Ukrainian territory. While WTI also spiked, it finished the week essentially flat following a stronger than expected inventory report from the Energy Information Administration (EIA).
Even as oil prices are on the rise, so is production. In the US, the EIA reports that crude production average 7.5 million barrels per day (BPD) last year, 1 million BPD over 2012 and the highest annual rate since 1989. The agency estimates that production should run about 8.5 million BPD this year and hit 9.6 million BPD next year, the highest level of production since 1970.
The Organization of Petroleum Exporting Countries (OPEC), which produces about 40 percent of the world�� oil, is forecasting similar supply growth. This past January production rose by 28,000 BPD to 29.71 million BPD, largely thanks to increased production from Libya. Including America�� production increase, non-OPEC countries are expected to boost their supply by 1.29 million BPD to 55.43 million BPD.
With consumption forecast to grow by about 1.3 million BPD in 2014, that leaves supply and demand in almost perfect balance, supporting strong oil prices even when and if the crisis in Ukraine abates. - [By Aaron Levitt]
While the previously mentioned XLE is a great fund, the iShares Global Energy (IXC) may be a better bet. The key is the fund�� global exposure. The exchange-traded fund (ETF) tracks 91 different oil stocks — with about 48% of its exposure to those energy firms located outside the United States.
- [By Louis Navellier]
The ishares Dow Jones U.S. Energy Sector Fund (IYE) tracks the performance of 99 major energy stocks in the U.S. IYE is actually up 20% for the year, but it has been trending downward over the past month. Meanwhile, the ishares S&P Global Energy Sector Fund (IXC) is up just 10% so far for the year. This fund, which also contains 99 holdings from all over the world, provides perhaps the best view of how the energy sector is faring on the global level. It has also fallen in the past month.
- [By Russ Koesterich]
The list above is based on my team's analysis of whether sector valuations appropriately price in each sector's expected earnings growth, profitability and risk. Based on these factors, I have a preference for the energy and informational technology sectors, accessible through the iShares S&P Global Energy Sector Fund (IXC) and the iShares S&P Global Technology Sector Fund (IXN). And as I write in my new Investment Directions commentary piece, if it turns out that we do see more investors rotating out of defensives and into more attractively priced cyclicals, these two sectors are poised to especially benefit.
Hot Oil Service Companies To Own In Right Now: Travelzoo Inc(TZOO)
Travelzoo Inc., an Internet media company, together with its subsidiaries, publishes travel and entertainment deals from travel and entertainment companies, and local businesses in North America and Europe. Its publications and products include the Travelzoo Websites, such as travelzoo.com, travelzoo.ca, travelzoo.co.uk, travelzoo.de, www.travelzoo.es, and travelzoo.fr; the Travelzoo Top 20 e-mail newsletter; and the Newsflash e-mail alert service. The company also operates SuperSearch, a pay-per-click travel search tool; Travelzoo Network, a network of third-party Websites that list deals published by Travelzoo; and Fly.com, a travel search engine that allows users to find the best prices on flights from various airlines and online travel agencies. In addition, it provides Local Deals and Getaways services that allow its subscribers to purchase vouchers for deals from local businesses, such as spas, hotels, and restaurants through the Travelzoo Website. As of December 31, 2011, the company?s advertiser base included approximately 2,000 travel companies, entertainment companies, and local businesses, including airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies. Travelzoo Inc. was founded in 1998 and is headquartered in New York, New York.
Advisors' Opinion:- [By Tom Taulli]
Valuation: Even with after the Expedia stock sell-off, shares of EXPE remain far from cheap. EXPE stock is trading for a trailing P/E of 46 vs. 33 for Priceline and 23 for Travelzoo (TZOO).�And considering the recent volatility, investors are certainly jittery about EXPE stock. As a result, another earnings disappointment could have a severe impact.
- [By Peter Graham]
The Q1 2014 Tripadvisor Inc (NASDAQ: TRIP) earnings report is due after the market closes on Tuesday, May 6th, with investors and traders alike who follow either the stock or large cap Priceline Group Inc (NASDAQ: PCLN), mid cap Expedia Inc (NASDAQ: EXPE) and small caps Travelzoo Inc (NASDAQ: TZOO) and Orbitz Worldwide, Inc (NYSE: OWW) should be paying attention to it. Aside from the Tripadvisor Inc earnings report, it should be said that Travelzoo Inc released 1Q 2014 earnings on April 17th and Expedia Inc released earnings last Thursday while the Q1 2014 Orbitz Worldwide earnings report is due today before the market opens and the Priceline Group Inc earnings report is due out on Thursday, May 8, at 9:30AM EDT. However, Tripadvisor Inc is a little different from these other travel booking companies as its main focus is to provide travel advice or reviews written by real travelers (which obviously leads to travel bookings that they make money on).
- [By Rich Smith]
If you are a Travelzoo (NASDAQ: TZOO ) shareholder but own fewer than 25 shares, management would really appreciate it if you would just go away.
Hot Oil Service Companies To Own In Right Now: Public Service Enterprise Group Incorporated(PEG)
Public Service Enterprise Group Incorporated, through its subsidiaries, operates in the energy industry primarily in the northeastern and mid Atlantic United States. The company primarily operates as a wholesale energy supply company that integrates its generating asset operations through its wholesale energy, fuel supply, energy trading, and marketing and risk management activities. It operates nuclear, coal, gas, and oil-fired generation facilities. The company also involves in the transmission of electricity and distribution of electricity and natural gas to residential, commercial, and industrial customers, as well as invests in the development of solar generation projects and energy efficiency programs. In addition, it owns and operates domestic projects engaged in the generation of energy; and offers appliance services and repairs to customers. As of December 31, 2010, it owned approximately 13,538 megawatts of generation capacity. The company also owned and operated approximately 17,608 miles of gas mains, 12 gas distribution headquarters, and 2 subheadquarters, as well as 62 natural gas metering and regulating stations. Public Service Enterprise Group was founded in 1985 and is based in Newark, New Jersey.
Advisors' Opinion:- [By Jake L'Ecuyer]
Leading and Lagging Sectors
In trading on Wednesday, utilities shares were relative leaders, up on the day by about 0.61 percent. Top gainers in the sector included PPL (NYSE: PPL), Empresa Distribuidora y Comercializadora Norte SA (NYSE: EDN), and Public Service Enterprise Group (NYSE: PEG). Telecommunications services sector was the top decliner in the US market on Wednesday.
Hot Oil Service Companies To Own In Right Now: American Realty Capital Properties Inc (ARCP)
American Realty Capital Properties, Inc., incorporated on December 2, 2010, is a real estate investment trust (REIT). The Company owns and acquires single-tenant, freestanding commercial real estate primarily subject to medium-term net leases with credit quality tenants. The Company is externally managed by ARC Properties Advisors, LLC. In February 2013, it announced the closing of the transaction to acquire American Realty Capital Trust III, Inc. In March 2013, it announced that it purchased a TD Bank office building in Falmouth, Maine. In April 2013, it closed lease acquisitions, including nine properties located in four states plus Puerto Rico with approximately 200,000 total rentable square feet. In April 2013, it closed an additional single tenant net lease acquisitions, including six properties leased to four investment grade or credit-worthy tenants, including CVS, Family Dollar, Hy-Vee and Advance Auto. In November 2013, American Realty Capital Properties, Inc acquired CapLease, Inc. Effective January 3, 2014, American Realty Capital Properties Inc, , through its Thunder Acquisition LLC unit, acquired the entire share capital of American Realty Capital Trust IV Inc (ARCT).
As of December 31, 2012, rental revenues derived from investment grade tenants. As of December 31, 2012, the Company owned 146 properties, which consists of 2.4 million square feet and located in 26 states, excluding one vacant property classified as held for sale. The Company is holder of 95.9% of the interest in the ARC Properties Operating Partnership, L.P.
Advisors' Opinion:- [By Rich Duprey]
Net-lease property REIT American Realty Capital Properties� (NASDAQ: ARCP ) says that with Capital Lease Funding (NYSE: LSE ) announcing the expiration of its 40-day "go shop" period and no other buyers being found, it plans to buy its rival sooner than originally intended.
Hot Oil Service Companies To Own In Right Now: Arcos Dorados Holdings Inc (ARCO)
Arcos Dorados Holdings Inc., incorporated on December 9, 2010, is a McDonald�� franchisee. As of December 31, 2010, the Company operated or franchised 1,755 McDonald��-branded restaurants, which represented 6.7% of McDonald�� total franchised restaurants globally. It operates McDonald��-branded restaurants under two different operating formats, Company-operated restaurants and franchised restaurants. As of December 31, 2010, of its 1,755 McDonald��-branded restaurants in the territories, 1,292 (or 74%) were Company-operated restaurants and 463 (or 26%) were franchised restaurants. It generates revenues from two sources: sales by Company-operated restaurants and revenues from franchised restaurants, which consist of rental income, which is based on the greater of a flat fee or a percentage of sales reported by franchised restaurants. As of December 31, 2010, it owned the land for 510 of its restaurants (totaling approximately 1.2 million square meters) and the buildings for all but 12 of its restaurants. It divides its operations into four geographical divisions: Brazil; the Caribbean division, consisting of Aruba, Curacao, French Guiana, Guadeloupe, Martinique, Puerto Rico and the United States Virgin Islands of St. Croix and St. Thomas; North Latin America division (NOLAD), consisting of Costa Rica, Mexico and Panama, and South Latin America division (SLAD), consisting of Argentina, Chile, Colombia, Ecuador, Peru, Uruguay and Venezuela. As of December 31, 2010, 35.1% of its restaurants were located in Brazil, 29.7% in SLAD, 27.1% in NOLAD and 8.1% in the Caribbean division. The Company conducts its business through its indirect, wholly owned subsidiary Arcos Dorados B.V.
Company-Operated and Franchised Restaurants
The Company operates its McDonald��-branded restaurants under two basic structures: Company-operated restaurants operated by the Company and franchised restaurants operated by franchisees. Under both operating alternatives the real estate location may ! either be owned or leased by the Company. It owns, fully manages and operates the Company-operated restaurants and retains any operating profits generated by such restaurants, after paying operating expenses and the franchise and other fees owed to McDonald�� under the Master Franchise Agreements (MFAs). In Company-operated restaurants, it assumes the capital expenditures for the building and equipment of the restaurant and, if it owns the real estate location, for the land as well. Under its franchise arrangements, franchisees provide a portion of the capital required by initially investing in the equipment, signs, seating and decor of their restaurants, and by reinvesting in the business over time. It is required by the MFAs to own the real estate or to secure long-term leases for franchised restaurant sites. It subsequently leases or subleases the property to franchisees.
In exchange for the lease and services, franchisees pay a monthly rent to the Company, based on the greater of a fixed rent or a certain percentage of gross sales. In addition to this monthly rent, it collects the monthly continuing franchise fee, which generally is 5% of the United States dollar equivalent of the restaurant�� gross sales, and pays these fees to McDonald�� pursuant to the MFAs. However, if a franchisee fails to pay its monthly continuing franchise fee, it remains liable for payment in full of these fees to McDonald��. As of December 31, 2010, it was engaged in several joint ventures, which collectively owned 24 restaurants, in Argentina, Chile and Colombia.
Restaurant Categories
The Company classifies its restaurants into one of four categories: freestanding, food court, in-store and mall stores. Freestanding restaurants are the type of restaurant, which have ample indoor seating and include a drive-through area. Food court restaurants are located in malls and consist of a front counter and kitchen and do not have their own seating area. In-store restaurants are part ! of a larg! er building and resemble freestanding restaurants, except for the lack of a drive-through area. Mall stores are located in malls like food court restaurants, but have their own seating areas. As of December 31, 2010, 808 (or 46.2%) of its restaurants were freestanding, 359 (or 20.5%) were food court, 265 (or 15.1%) were in-stores and 319 (or 18.2%) were mall stores. In addition, it has four non-traditional stores, such as food carts.
Reimaging
As of December 31, 2010, the Company had completed the reimaging of 308 of 1,569 restaurants. Many of the reimaging projects include the addition of McCafe locations to the restaurant. It has developed system-wide guidelines for the interior and exterior design of reimaged restaurants.
McCafe Locations and Dessert Centers
McCafe locations are stylish, separate areas within restaurants where customers can purchase a range of customizable beverages, including lattes, cappuccinos, mochas, hot and iced premium coffees and hot chocolate. As of December 31, 2010, there were 267 McCafe locations in the Territories, of which 12% were operated by franchisees. Argentina, with 71 locations, has McCafe locations, followed by Brazil, with 67 locations. In addition to McCafe locations, it has Dessert Centers. Dessert Centers operate from existing restaurants, but depend on them for supplies and operational support. As of December 31, 2010, there were 1,306 Dessert Centers in the Territories.
Product Offerings
The Company�� menus feature three tiers of products: affordable entry-level options, such as its Big Pleasures, Small Prices or Combo del Dia (Daily Extra Value Meal) offerings, core menu options, such as the Big Mac, Happy Meal and Quarter Pounder, and premium options, such as Big Tasty or Angus premium hamburgers and chicken sandwiches and low-calorie or low-sodium products, which are marketed through common platforms rather than as individual items. These platforms can be based on the ty! pe of pro! ducts, such as beef, chicken, salads or desserts, or on the type of customer targeted, such as the children�� menu.
Advisors' Opinion:- [By Chris Hill]
In this segment of Friday's Investor Beat, Motley Fool analyst Ron Gross gives investors one stock that he'll be watching closely this week. He takes a look at Arcos Dorados (NYSE: ARCO ) , which holds the franchise rights to McDonald's (NYSE: MCD ) in Latin America and the Caribbean. The company reports earnings next week, and while it has been a long-time holding for Ron in the Motley Fool's Million-Dollar Portfolio service, he sees reasons to be concerned here. The company's store growth is slowing, so he'll be watching closely to see what the company has to say next week.
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