Tag - NYSE:CVX

Right now I believe you have the opportunity to make multiples on your original investment by buying micro-cap oil and gas exploration companies.

Given the market's recent strength I realize I may sound like a market cheerleader - but I'm not. I believe there are huge opportunities in emerging markets for companies, and investors, that have the chutzspah to go after remote oil and gas reserves.

In his Validea, editor John Reese picks stocks based on the long-standing strategies of "legendary" investors.

Here, the advisor takes a look at Chevron (NYSE: CVX), based on the investment strategy of leading growth and value investor James O'Shaughnessy.

"The second criterion requires that the company exhibit strong cash flows. Companies with strong cash flow are typically the value oriented investments that this strategy looks for.

"The company's cash flow per share must be greater than the mean of the market cash flow per share ($0.55). CVX's cash flow per share of $15.36 passes this test.

"This particular strategy looks for companies whose total number of outstanding shares are in excess of the market average (597 million shares). These are the more well known and highly traded companies. CVX passes this test.

"A company's trailing 12 month sales ($243,189 million) are required to be 1.5 times greater than the mean of the market's trailing 12 month sales ($17,254 million). CVX passes this test.

"The final step in the Cornerstone Value strategy is to select the 50 companies from the market leaders group (those that have passed the previous four criteria) that have the highest dividend yield. CVX, with a dividend yield of 3.83%, is one of the 50 companies that satisfy this last criterion."
 

Stocks continued Thursday's rally as investors reacted to news about the second quarter GDP number with the Nasdaq the exception.

The Dow closed up 16.93 to finish the week at 9,171.39; the Nasdaq finished down at 1,978.50, losing 5.80 points after showing gains for most of the day; and the S&P 500 close up 0.72 points to finish at 987.47.

Stocks in the Russell 2000 closed down 0.09 points to end at 557.71. 
 

Leading small-cap gainers include VirnetX Holding (AMEX:VHC) up 112%; Anadys Pharmaceuticals (Nasdaq:ANDS) up 44%; Inovio Biomedical (AMEX:INO) up 38%; and Integra Bank (Nasdaq:IBNK) up 34%.

Small-cap decliners were lead by notebook computer parts maker Synaptics (Nasdaq:SYNA) down 33% on news that the firm had disclosed fiscal 2010 growth will be slower than expected. Analysts immediately downgraded the stock driving prices down immediately at the open.

Other small-cap decliners include iStar Financial (NYSE:SFI) down 19%; Ariad Pharmaceuticals (Nasdaq:ARIA) down 18%; and YRC Worldwide (Nasdaq:YRCW) down 17%.

*****Today was the big one. Say what you want about yesterday's rally, the reaction to this morning's 2Q GDP number should be expected to influence trading going forward.  

Now, I'm going to let TradeMaster Jason Cimpl's morning commentary to his traders provide the in-depth analysis to the GDP number:  

Second quarter annualized rate GDP was reported at -1.0%, compared to the consensus of -1.5%.  

First quarter GDP was revised lower to a 6.4% decline from the previous reading of a decline of 5.5%. Personal consumption fell 1.2% (the consensus had been 0.5%). 
This market might be crazy enough to ignore the downward revision from the previous quarter, but how can they possibly brush off that personal consumption reading? 
Personal consumption is the largest portion of GDP. This number should have investors concerned. 

Volume numbers today will be a big tell if the street really likes the GDP figures. At the end of the day, GDP is a lagging indicator, so don't expect that today is the game changer. 

Thanks, Jason. 

He's got his Friday video online where he'll do a quick recap of the market for the week and more importantly, provide guidance on market direction and action for the coming week. Click here to watch Jason's video analysis.

*****Deutsche Bank (NYSE:DB) CEO Josef Ackerman says "The crisis is not over." He told Bloomberg that "[b]ad loans are the next wave. Banks that have fared relatively well so far will also be affected by this." 

As evidence, problem loans at Deutsche Bank rose 44% on the last quarter. Deutsche Banks has raised its loss reserves to $1.4 billion and also reduced its balance sheet and risk-taking.  

*****I continue to view oil as a critical leading indicator for global economic recovery. So long as oil prices remain strong, investors are clearly ignoring current demand statistics and focusing instead on future demand and slack production growth.  
For instance, Europe's third largest oil company, Total SA (NYSE:TOT) reported that production fell 7.3% in its 2nd quarter. That puts Total's production back to year 2000 levels.  

The reason is obvious: demand is down, and Total, like most oil companies, is cutting back on investment in new production because prices are down.  

Despite a slight rise in production, Chevron (NYSE:CVX) reported a 51% drop in revenues. It would seem likely that the revenue shortfall will affect Chevron's investments in new production, too.

The big question, though, is if investors will shift their focus to current demand numbers. At some point, declining profitability and continuing economic weakness should bring oil prices down.

*****It's pretty clear now that trends like weak GDP, weak demand for oil, rising unemployment we've seen emerging from the financial crisis and recovery will be with us for a long time.

Clearly, these conditions will have a profound effect on your investments in the months and years ahead.

And because many of these conditions are a direct result of government bailouts, I'm calling the condition Managed America.

We're hosting a video conference to look forward to investing strategies for the remainder of 2009 and beyond, and to explore my concept of Managed America and how you can still make profitable investments. The U.S. economy has changed and investors need to understand the changes in order to make the best investments.

The Managed America video conference will air on August 10, 2009 at 6:00 P.M. You can register for this important event when you click HERE.

Best Regards,

Ian Wyatt
Editor
Daily Profit

Today was options expiration and it made for dull trading. The S&P 500 finished up 2.74 at 921, the Dow Industrials finished down 16.85 at 8,538XXX. The Nasdaq was the strong index, it finished the day up 19.75 at 1,827 on a Goldman Sachs (NYSE:GS) upgrade of Microsoft (Nasdaq:MSFT). 

Oil prices fell below $70. But even better, gasoline futures dropped below $2 after inventory data showed a huge surplus. That suggests prices at the pump may start to head lower.

Large cap oil stocks like Exxon-Mobil (NYSE:XOM) and Chevron (NYSE:CVX) were down in the 1% range, but several micro-cap oil & gas exploration stocks were up. Brigham Exploration (Nasdaq:BEXP) was up 4.36%, Kodiak Oil (AMEX:KOG) was up 7% and Cano Petroleum (AMEX:CFW) was up 3.5%.

The Russell 2000 finished much like its large-cap brethren, with a minimal 3.16 point gain.

Top small cap winners for the day included TerreStar (Nasdaq:TSTR) up 30%, Sealy (NYSE:ZZ) up 20.5% and Smith and Wesson (Nasdaq:SWHC) up 21.9%.

Small cap decliners of note include A-Power Energy (Nasdaq:APWR) down 12%, E*Trade (Nasdaq:ETFC) down 11% and Cost Plus (Nasdaq:CPWM) down 13%.

So now the government is actually going to subsidize car sales with up to $4,500 in incentives for car buyers who get rid of cars that get 18 mpg or less.  

I understand that the auto industry is hurting. And I also get that more efficient cars help reduce our dependence on foreign oil. But is it appropriate to use tax payer dollars to fund auto purchases?  

Perhaps if we were talking about something that is a necessity, like farming, subsidies make some sense. After all, we need farmers. I think we have to consider cars a luxury, or at least a discretionary purchase.  

Not only that, but a car subsidy can only create temporary demand. And given the precipitous drop in car sales (10 million vehicles will be sold this year as opposed to 16 million in 2007), it's highly unlikely any momentum can be created. Not with unemployment on the rise. And not with home values still falling.  

*****Increasing demand based on stimulus spending is a temporary fix. The government is just buying time hoping that the economy will recover. But many of the signs of recovery are based in stimulus spending.  

*****Analysts are now acknowledging that oil has been rallying on a falling dollar and on expectations of price inflation. Of course, the potential for price inflation is, once again, directly related to government stimulus spending.  

The massive amounts of Treasury bonds that have been and will be sold are boosting interest rates and driving the value of the U.S. dollar down. So any asset priced in dollars is rising in price. Like oil. Mind you, that doesn't mean its value is rising, just its price.
 
At some point, higher oil prices will affect the prices of other goods. But as I've noted before, it's likely to be a while before producers are able to raise prices in the current economic environment. Remember, it wasn't until 2007 that inflation really started to become an issue.  

*****Another catalyst for commodity prices in general is supply. Global demand is down, credit has been difficult to get, and miners and producers have not been investing in increasing supply.  

That sets the stage for supply/demand imbalances when economic growth returns.  
We'll be discussing these topics and our bullish outlook for commodity stocks in next Wednesday's Video Conference. It's titled Inflation Busters: Discover the Stocks to Grow and Protect Your Wealth and will air on Wednesday, June 24 at 6 pm. It's free to attend, you can sign up HERE.  

*****Jason Cimpl, technical analyst at TradeMaster Daily Stock Alerts, has his latest video chart analysis ready for you. Last Friday, Jason absolutely nailed this week's trading. I hope you find this week's analysis just as useful. Here's the LINK.  

Investors saw lots of red in today’s trading session as regional manufacturing data suggested that economy is not picking up as much as had been hoped. Most economists had expected gains in the New York Fed’s manufacturing index but were instead treated to numbers indicating that the factory sector shrank at a more severe rate than expected.

A stronger U.S. dollar pulled oil below $70 away from its eight month high.

As of press time, 3:30 P.M. Eastern, the Dow was down -194.75 to 8,604.50; the Nasdaq was down -46.29 to 1,812.51, and the S&P 500 was down -23.25 at 922.96.

The Russell 2000 Index, comprised of the top 2,000 small-cap stocks, was down 16.77 at 510.06.

Bucking the downward trend today was pharma and financials. Two of the top percentage gainers were JazzPharma (Nasdaq:JAZZ) up 69.7% on positive news about it fibromyalgia drug and MAP Pharma (Nasdaq:MAPP) up 11.89%. MAPP has been on a tear since late May when it shot up to $11.39 from $3.15.

Other small-caps showing leadership today include QEP (Nasdaq:QEPC) up 39.07%, Tongxin Intl (Nasdaq:TXICU) up 24.75%, and two financials, American Capital (Nasdaq:ACAS) up 14.67% and New Century Bancorp (Nasdaq:NCBC) up 14.83%.

Small-cap decliners were lead by Oil-Dri Corp. of America (NYSE:ODC) down 23.24% following Friday’s news that it will lose its largest customer in the cat litter retail segment. Other leading decliners include Virgin Mobile USA (NYSE:VM) down 16.98%, book retailer Borders Group (NYSE:BGP) down 13.16%, and Integrated Electrical Services (Nasdaq:IESC) down 17.64%.

*****Summer doesn’t officially start for a few more days. Tell that to the parents who are now getting their kids off to camp or getting ready for vacation. For the standard two-income household, living easy in summertime is just a memory.

Including today, we have just 12 more trading days until the end of June and the end of the second quarter. I suspect we will have seen the highs for stock prices by then. That is, if we haven’t seen them already.

Oil backed off recent highs on Friday. And that’s likely to continue. Oil was too cheap at $33 a barrel. But $73 is too high, at least for now while much of the developed world is still mired in an economic downturn. We know demand is still weak. And we know there are looming supply issues when demand picks back up. However, the issue right now is the economy.

*****Oil has been rallying as the news cycle has been relentlessly optimistic about an imminent economic recovery. In fact, many leading economists expect U.S. GDP to actually grow in the third quarter.

Oil stocks that we’ve been following have been on a tear the market bottom, including Graham Corp. (AMEX:GHM) up 81%; Brigham Exploration (Nasdaq:BEXP) up 239%; Gulfport Energy Corp. (Nasdaq:GPOR) up 326%. Even the majors like ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), BP (NYSE:BP), and ConocoPhillips (NYSE:COP) are bringing investors some decent returns, though not as great as small-cap stocks in the same sector.

Investors have bought the rumor of economic recovery. We’ll see how they respond to the news. I’ll be watching oil as the leading indicator for economic expectations.

Right now, it seems like stock prices have priced in a modest recovery. And if investors perceive that there’s not much upside left for stock prices, it would makes sense to trim exposure, take profits, or however you want to put it.

*****We’ve seen anecdotal evidence that investors are moving funds out of the stocks that have led the market higher. Technology has been having trouble making headway. And we’ve seen strength in healthcare and consumer staple stocks. Plus, the Volatility Index (VIX), which measures the cost of put options (which rise in value as stocks or indices fall, thereby giving investors downside protection) has been on the rise.

This suggests that investors are preparing for a downside move for stock prices, or, at the very least, protecting gains they have made.

*****On Mondays, I’m going to start offering a look at the economic data coming out during the week ahead. This week is a bit unusual as all the economic data is out on Tuesday. Tomorrow we get Housing Starts, Building Permits and the Producer Price Index (PPI).

Of course, consumers will focus on the housing numbers. But I’d expect any numbers will be interpreted with optimism. Investors seem to understand that the bottoming process for the housing market will be volatile and that wild swings in the data should be expected.

In my opinion, the PPI is the one to watch. The U.S. dollar rallied a bit last week, but there’s no doubt that massive Treasury bond sales have investors worried about a weaker dollar the potential for inflation to pick up. Add to that improving retail sales numbers, helped by higher gasoline prices, and you have the potential for a higher-than-expected PPI reading. Needless to say, that would not be good for stocks.

I’ll talk to you tomorrow.

Ian Wyatt

P.S. You’ll recall from Friday’s issue we start sharing charting analysis from TradeMaster’s technical analyst, Jason Cimpl. If you didn’t have a chance to catch, here’s the link. You’ll get his take on this week’s market direction. Since this is a new feature for Daily Profit I’d greatly appreciate receiving any feedback from you on it.

Stocks are trading lower today as fearful investors brace themselves in anticipation of poor earnings reports that will begin being released this week.

At 1:40 pm ET, the Russell 2000 (NYSE:IWM) is down 14.55, or 3.19%, at 441.58, while the Dow is down 1.75% at 7,877.09 and the S&P 500 is down 2.09% at 824.93.

Small caps bucking the trend today include SumTotal Systems (Nasdaq:SUMT), up 47% after receiving a buyout offer. Legacy Reserves (Nasdaq:LGCY) is also climbing 29% today after receiving a proposal from Apollo Management to acquire all outstanding units of the company at a cash purchase price of $14 per unit.

******Time flies. Seems like earnings season just ended and yet here we are again. But first-quarter earnings kick off tomorrow with Alcoa (NYSE:AA).

Given how far the stock market has come over the last three weeks, you might think stock prices are set up for a fall as the reality of earnings dashes the enthusiasm that economic recovery is at hand.

Earnings will be bad. S&P 500 companies are expected to report that earnings are down around 35% from the year-ago quarter. And earnings were already falling then.

But don’t forget, stocks have been rallying because investors are anticipating an economic recovery. Though there have been some subtle signs that the economy is starting to improve, it hasn’t happened yet. In other words, nobody expects Q1 earnings to be good.

This earnings season is going to be all about guidance. What do companies see in the future? Will they be willing to say things look better? And more importantly, will any optimism be reflected in revenues and earnings forecasts?

That’s what investors will be focused on. I’d say it’s an “even money bet” whether stocks are higher or lower when earnings season wraps up a few weeks . . .

Small-cap stocks drifted lower, pulled down by concerns over sizable upward revisions in recent employment reports, which countered any upside glee when the headline non-farm figure was below “worst-case” scenarios. The market is now in a position today of working out whether this jobs report is already priced into the market, or reflects a little darker picture than current stock market valuations. At 9:52 a.m. ET, the Russell 2000 (NYSE:IWM) was down 12.03, or 2.46% at 489.68.

The Labor Department report showed that 524,000 non-farm payroll jobs were lost in December, which was in line with the average analyst forecast for a decline of 525,000 jobs. However, “whisper” numbers were upward of 650,000, so the key headline figure on the jobs release was basically better than feared. That said, some of the other details were not pretty. For instance, the unemployment rate climbed to 7.2%, which marked the highest level in 16 years, and which was above the 7.0% consensus projection. It was also the largest year-over-year increase in the unemployment rate since the 1982 recession. What’s more, the Labor Department dramatically revised job loss figures for October and November, adding another ...

Small-cap stocks pushed higher Wednesday, recapturing a little more than one-third of Tuesday’s massive decline as technology stocks and commodity shares were back in favor with investors and distressed financial issues stabilized. The Russell 2000 (NYSE:IWM) closed up 9.87, or 1.40%, at 717.16 and is now down 6.3% for the year. Meanwhile, the Dow was up 0.34% Wednesday, but still is off 15% for 2008, while the S&P 500 was up 0.61% on the day, but remains down 16% for the year.

One could argue that stocks were oversold after suffering the largest one-day rout of the year Tuesday, and while that likely played a role in the bounce today, there were also favorable stories to help fuel the move. It seemed like a majority of the earnings reports were either a non-event or slightly upbeat, and decent results from Texas Instruments Inc. (NYSE:TXN) appeared to project an immediate positive tone into the tech arena, which had been struggling of late. TXN gained about 1% on the day, and other tech stocks such as Research in Motion Ltd. (Nasdaq:RIMM), the makers of Blackberry, climbed 6%.

Homebuilders, which were absolutely hammered Tuesday, mounted a recovery bounce today, with the ISE Homebuilders Index rising 3%. DR Horton Inc. (NYSE:DHI) was up about 4% and Pulte Homes (NYSE:PHM) was up some 5%.

Energy shares were higher, even though crude oil prices slipped to fresh five-month lows. In fact, several commodity sectors provided a boost to the stock market, with coal, metals, steel, oil exploration, gas utilities and integrated oil and gas stocks among the best performing sectors. Chevron Corp. (NYSE:CVX) rose 3% and was one of the top lifts on large-cap indices and that strength spilled over into small-cap energy names as well. It was interesting to see that even though commodity stocks were a bullish element today for equities, the overall Commodity Research Bureau Index was actually down about 0.7%. Part of that slide in physical markets was likely tied to a strong tone in the U.S. dollar, which crimps demand for commodities priced in dollar terms. The greenback charged to fresh 11-month highs against the . . .

Small-cap stocks pushed higher Tuesday, bolstered by a sharp pullback in crude oil prices that allowed a little breathing room toward inflation fears and the consumer spending picture. In addition, Federal Reserve Chairman Ben Bernanke said that the central bank could extend the emergency lending window to strapped financial institutions, which took a little heat off the credit crunch — at least momentarily. The Russell 2000 (NYSE:IWM), gained 24.46, or 3.72%, to 682.72, generating the largest one-day gain since March 18 and the third largest one-day percentage rally of the year.

Small-cap stocks were noticeably stronger than their large-cap brethren, which were dragged down by significant losses on key oil stocks such as Exxon Mobil (NYSE:XOM), which was down 0.7% heading toward the close, Chevron (NYSE:CVX), off 1% and oil services stock Schlumberger Ltd. (NYSE:SLB), which shed 3.7%.

Before the stock market open earlier today, Bernanke’s comments erased solid overnight losses in stock index futures, and helped alleviate mounting worldwide concern about the health of the banking system. Before the Bernanke rescue, European shares were sinking, paced by a slide to five-year lows in bank stocks, and elsewhere around the world global stock index products slipped into bear market territory.

Even though the tone improved with today’s recovery in equities, the market is still clearly in a tenuous position fretting about high energy costs amid sluggish . . .

On Thursday, we examined why the oil sector will be one of the most profitable sectors to round out 2008, and gained insight from Jason Votruba, vice president and co-portfolio manager of the UMB Scout Small Cap Fund, and Richard Wyman, vice president and senior oil and gas analyst at Canaccord Adams. Today, Votruba and Wyman name their favorite small-cap oil and gas stock picks.

Wyman favors oil and gas companies with an established land position, which he calls “scalable repeatable growth opportunity.” The analyst has “buy” ratings on ProEx Energy Ltd. (TSX:PXE), a natural gas unconventional player; Pearl Exploration and Production Ltd. (TSV:PXX), a heavy oil player; and Sterling Resources (TSV:SLG), an exploration and production company drilling in the U.K. sector of the North Sea and Romania. Wyman said Sterling is a bit riskier, but has an active drilling program.

Votruba is overweight energy in his portfolio, with energy comprising 20% to 25% of the fund manager’s diversified small-cap fund. This compares with the Russell 2000 (NYSE:IWM), for which energy composes 7%.

Among small-cap oil and gas companies, Votruba recommended oil and gas exploration and production company Swift Energy Company (NYSE:SFY). “[It’s] probably one of my favorite picks right now in the E&P. I see it as more of a lower risk play. It’s involved in lower-risk development, and not doing a lot of wild-cat exploration; it’s on their existing properties.” 

Swift Energy has had its obstacles. Investors rebuked the company in the past after management decided to commence operations in New Zealand — a move that boded poorly in retrospect. Management lost credibility with investors as a result, but Votruba thinks the company’s back on track. According to Votruba, Swift Energy has now surpassed both Chevron (NYSE:CVX) and Texaco as the largest oil producer in Louisiana.

However, the company did see production fall in the first quarter on account of production issues. Specifically, Swift began producing new wells that were shut down after pressure issues arose in a handful of the pipelines, which could cause damage to the oil wells.  But Votruba says he’s confident Swift will be able to get its wells operating again in 60 to 90 days, and thinks production will climb 30% in the . . .

Small-cap stocks opened lower, pulled down by a surprising jump in the unemployment rate, which climbed to 5.5%, the highest rate in 3 ½ years. At 9:53 a.m. ET, the Russell 2000 (NYSE:IWM) was down 7.37, or 0.97%, at 755.90.

The headline non-farm payroll figure came in at minus 49,000, which was better than the forecast for a slide of 58,000, but the payroll figure was upstaged by the stunning jobless rate number. Economists had forecast a rise in the unemployment rate to 5.1% from 5%, and a jump of 0.5% is extraordinarily rare. In fact, this marked the biggest monthly jump in the unemployment rate in 22 years.

“The unemployment rate soared in May because of huge surge in the labor force, perhaps because of seasonal adjustment difficulties associated with the ending of the school year,” Steven Wood, chief economist with Insight Economics, said in an email report. “However, this big increase may also have been a catch-up from its slow rise in the past few months. In any event, the number of unemployed has increased by 1.6 million to 8.5 million and the unemployment rate has increased by 1 percentage point to 5.5%. In the post World War II period, every time the unemployment rate has jumped by a full percentage point in the course of a year, the economy has slipped into recession.”

Even the headline figure, which might have been embraced by equity bulls if not for the unemployment rate surge, wasn’t exactly a sign of great things. According to Wood, “The bottom line is that jobs declined in May and the economy has clearly slipped into a mild jobs recession because the housing meltdown and credit market turmoil has spread to the broader economy. Persistent job losses will eventually pull the overall economy into recession.”

This was the kind of head-scratching, out-of-leftfield numbers surprise that can hatch an entire cottage industry of data conspiracy theorists. For now, traders and analysts tilted toward the bullish side of things were explaining away the sudden jump . . .

Small-cap stocks edged higher Tuesday, supported by a pullback in crude oil prices, a firm tone in the U.S. dollar, a jump in tech stocks and modest buying from those who saw last week’s damage as overdone. Energy-inspired trades, both on the buy side and sell side, were also a prominent feature in stocks. The Russell 2000 (NYSE:IWM) closed up 10.28, or 1.42% at 734.38.

Despite an extended holiday weekend, trading decisions in equities continued to be directed by the same dominant element that was the focal point last week – gyrations in crude oil prices. When crude oil was higher before this morning’s opening, stocks were lower in pre-market trading, and when the energy market tumbled right before the opening, stocks started higher and held onto those gains throughout the session.

With crude oil taking a breather today, energy stocks became a profit-taking target, and one of the major drags on large-cap index products came from the energy sector. Exxon Mobil Corp. (NYSE:XOM) was off 0.8% and Chevron Corp. (NYSE:CVX) was down 1.2%. Another play on the crude oil decline came from airline stocks—a group that could use a break on the energy front after being hammered for months on end. The AMEX Airline Index was up 3.8% Tuesday, and small cap US Airways Group Inc. (NYSE:LCC) gained 4.5%, small comfort after collapsing 46% last week...

Investors looking to strike it rich with a play in oil have many avenues to explore, including the exploration sector itself, where they’ll find the likes of Gulf Island Fabrication Inc. (Nasdaq:GIFI).

Based in Houma, La., Gulf Island Fabrication is a leading builder of offshore drilling and production platforms, along with other structures needed to harvest oil and natural gas from deep under the sea.

Operating under four subsidiaries — Gulf Island LLC, Gulf Marine Fabricators, Dolphin Services LLC and Southport LLC — the company employs about 1,900, including 1,100 at its Louisiana facilities. Four of Gulf Island’s six fabrication yards are along the Houma Navigation Channel, about 30 miles from the Gulf of Mexico. The others are near Corpus Christi, Texas.

The company says demand for its goods and services is coming from operations in the Gulf, North and West Africa, Latin America, the Caribbean, the Middle East, offshore Canada and the North Sea. In 2007, deepwater projects accounted for 78% of revenue, and foreign destinations generated 24% of revenue.

Four analysts who follow Gulf Island Fabrication have a cautiously positive opinion, with three rating the stock a “hold” and another calling it a “strong buy,” according to Thomson Reuters. The 12-month median price target for Gulf Island is $39.50 — a level that the stock blasted through since its April 23 first-quarter earnings release. Shares closed Thursday at $43.46.

Gulf Island Fabrication posted blowout numbers for the three months ended March 31. Revenue climbed to $123.7 million, from $109.4 million a year earlier. Net income tripled to $13.4 million, compared with $4.4 million the year before, while earnings per share rose to $0.94, from $0.31. And the company pays quarterly dividends, now $0.10 a share.

The stock has seen a rapid rise since bottoming at a 52-week low of $24.88 on Feb. 1. Shares of Gulf Island Fabrication, which teased the $40 level in late 2006 and again last fall, have solidly crossed that threshold, hitting an all-time high of . . .

The Russell 2000 (NYSE: IWM) fell for the third consecutive time today following news of a decline in industrial production and renewed fears of a credit squeeze. The Russell 2000 lost 2.10 points, or 0.27%, to 769.50. The Dow Jones Industrial Average (INDU) added 66.74 points, or 0.51%, to 13,176.79.

On a year-to-date basis, the Russell 2000 has retreated 2.28%, while the Dow has risen 5.63% and the S&P 500 has added 2.97%.

Industrial production unexpectedly fell 0.5% in October, the U.S. Federal Reserve reported before the opening. That’s the biggest decline since January, defying economists’ projections of a rise of 0.1%. Industrial production added 0.2% in September.

The decline was due primarily to a 1.6% drop in utilities, as well as smaller declines in mines, construction and consumer goods. Compared with October 2006, industrial production has increased 1.8%.

Capacity utilization for the total industry declined to 81.7% from 82.2% in September.

The data tell us that the U.S. economy is probably headed for a slowdown, as industrial production is about 20% of gross domestic product. On the plus side, factories have room to ramp up production without triggering inflation.

The Russell 2000 (NYSE: IWM) is in the red as positive news from the tech sector lifts the Dow Jones Industrial Average (INDU) but fails to impress small-cap investors. At 1:52 p.m. ET, the small-cap index had shed 2.42 points, or 0.31%, to 769.18. The Dow Jones was up 63.89 points, or 0.49%, to 13,173.94.

The mood in pre-market trading was bullish following news that analysts have raised their recommendations for Hewlett-Packard Co. (Nasdaq: HPQ), the world’s largest maker of personal computers, and energy giant Chevron Corp. (NYSE: CVX).

Also contributing good news was tech sector heavyweight Cisco Systems Inc. (Nasdaq: CSCO), a maker of networking equipment, which announced that it has authorized additional stock repurchases valued at as much as $10 billion, raising the total amount to $62 billion.

Stocks started in positive territory but small caps tumbled down soon afterward, while the Dow held on for longer before trimming some of its gains and eventually also slipping into the red.

The bears’ return was facilitated by news that U.S. industrial production surprisingly fell 0.5% in October, the most since January, according to data released by the U.S. Federal Reserve before the opening. Industrial production added 0.2% in September.

The data confirm economists’ projections that U.S. economic growth is shifting into lower gear. Industrial production is about 20% of gross domestic product.

But the bulls managed to regain their footing and the major indices, with the exception of the Russell 2000, started climbing and moved into the green at about 11 a.m. ET.

The Russell 2000 (NYSE: IWM) is deep in negative territory while the Dow Jones Industrial Average (INDU) is marginally lower following news of a surprise drop in industrial production.

At 10:41 a.m. ET, the small-cap index was down 9.68 points, or 1.25%, to 761.92. The Dow was down 16.02 points, or 0.12%, to 13,094.03.

Industrial production surprisingly fell 0.5% in October, the U.S. Federal Reserve reported minutes before the opening. That’s the biggest decline since January. Economists were expecting a rise of 0.1% after industrial production added 0.2% in September.

The decline was due primarily to a 1.6% drop in utilities, while mines fell 0.6% and construction slipped 0.4%.

Capacity utilization for the total industry declined to 81.7% from 82.2% in September.

The numbers tell us that the U.S. economy is probably headed for a slowdown, as industrial production is about 20% of gross domestic product. But the on the other hand, factories have plenty of room to ramp up production without triggering inflation.

In corporate news, there was a bullish mood before the start of trading on news that analysts have raised their recommendations on computer hardware maker Hewlett-Packard Co. (Nasdaq: HPQ) and energy giant Chevron Corp. (NYSE: CVX).

Also contributing good news was Cisco Systems Inc. (Nasdaq: CSCO), after the Internet communications company authorized additional stock repurchases valued at as much as $10 billion, raising the total amount to $62 billion.

Stocks started in positive territory but small caps tumbled down soon afterward, while the Dow held on for longer before trimming some of its gains and eventually also slipping into the red.

The Russell 2000 (NYSE: IWM) futures are higher and the small-cap index will most likely open in positive territory, recovering from two days of losses.

Big name players are helping create a bullish mood this morning after news that analysts have raised their recommendations on computer hardware maker Hewlett-Packard Co. (Nasdaq: HPQ) and energy giant Chevron Corp. (NYSE: CVX).

Also contributing is Cisco Systems Inc. (Nasdaq: CSCO), after the internet communications company authorized additional stock repurchases valued at as much as $10 billion, raising the total amount to $62 billion.

In economic news, the U.S. Federal Reserve is scheduled to release data on industrial production in October minutes before the start of trading. Economists are expecting to see a small rise.

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Canadian Solar Inc. (CSIQ), up 13% on news that is has signed a new contract to deliver solar power station projects in Spain.
• American Railcar Industries Inc. (ARII), up 11% on news billionaire Carl Icahn bought more shares.
• China Techfaith Wireless Communication Technology Ltd. (CNTF), up 7%.

Biggest percentage losers:

• Acacia Research-Acacia Technologies (ACTG), down 30% on news of a negative ruling in a patent infringement trial with Microsoft Corp. (MSFT).
• Zygo Corp. (ZIGO) down 7%.
• Salix Pharmaceuticals Ltd. (SLXP) down 6%.

The Russell 2000 (NYSE: IWM) and the Dow are firmly in negative territory in mid-session trading. At 1:07 p.m. ET, the small-cap index had lost 3.88 points, or 0.46%, to 841.84. The Dow Jones Industrial Average (INDU) was off 120.80 points, or 0.85%, to 14,043.73.

The bears are dominating the action on Wall Street, as investors react to news of a strike at Chrysler LLC and poor earnings from industry heavyweights.

Workers at Chrysler started walking out of the factories this morning as the newly-private automaker failed to reach a contract agreement with the United Auto Workers union.

UAW is focused on job security at a time when Chrysler, which was bought by Cerberus Capital Management for about $7.4 billion earlier this year and divorced DaimlerChrysler, has been trying to slash operating costs.

Trading began on a negative note following news that aluminum giant Alcoa Inc. (NYSE: AA) missed earnings expectations. The New York-based company reported a net income of $0.63 per share, while analysts were forecasting $0.64 per share. Investors were hoping Alcoa would kick off the third quarter earnings season with upbeat results.

The Russell 2000 (NYSE: IWM) has stumbled following news of poor earnings from major players.

At 10:08 a.m. ET, the small-cap index had lost 3.80 points, or 0.45%, to 841.92. The Dow Jones Industrial Average (INDU) was down 60.07 points, or 0.42%, to 14,104.46.

The Russell 2000 futures were pointing higher but small caps opened lower following news that aluminum giant Alcoa Inc. (NYSE: AA) missed earnings expectations. The New York-based company, the first big player to report third-quarter earnings, reported a profit of $555 million. That’s a net income of $0.63 per share, while analysts were forecasting $0.64 per share.

Continuing the disappointing earnings trend, energy giant Chevron Corp. (NYSE: CVX) warned that its third-quarter profit would fall due to lower gasoline prices. During the second quarter, the San Ramon, Calif.-based company achieved a profit of $5.4 billion, the highest in its history.

Elsewhere, the Mortgage Bankers Association reported that its weekly measure of mortgage loan application volume increased 2.4% for the seven days ended Oct. 5.

The refinance index also increased, adding 2.7%, while the refinance share of mortgage activity increased to 46.2% of total applications from 46% during the previous week. That’s a sign that homeowners are refinancing adjustable mortgages before they reset to higher rates.

Turning to stock markets overseas, Japan’s Nikkei 225 advanced 0.1%. In Europe, the United Kingdom’s FTSE 100 index let go 0.1%, while Germany’s DAX 30 index rose 0.2%.

The Russell 2000 (NYSE: IWM) futures were higher half an hour before the start of session, but the small-cap index will probably be affected by news of poor earnings.

The much-anticipated earnings report from aluminum giant Alcoa Inc. (NYSE: AA) did not live up to expectations. The New York-based company, the first big player to report third-quarter earnings, reported a profit of $555 million. That’s a net income of $0.63 per share, while analysts were forecasting $0.64 per share.

Meanwhile, energy giant Chevron Corp. (NYSE: CVX) told investors that its third-quarter profit would fall from the record highs achieved in the second quarter. The decline is due to lower gasoline prices. During the second quarter the San Ramon, Calif.-based company achieved a profit of $5.4 billion, the highest in its history.

Elsewhere, the Mortgage Bankers Association reported that its weekly measure of mortgage loan application volume increased 2.4% for the seven days ended Oct. 5.

As American consumers continue to feel pain every time they pull up to a gasoline pump, renewable energy remains a popular talking point. The question is when will there be more action than talk, and when will investors in companies making such alternative fuels as ethanol reap a bumper crop of benefits in share price.

Ethanol obviously has grown beyond a fad as an energy source, and Aventine Renewable Energy Holdings Inc. (NYSE: AVR) is one of the biggest producers and marketers in the United States. The company was established in 1981, giving it a marketing strength absent from many of its recently arriving competitors. Little goes to waste at Aventine: while its strength is ethanol, the company also produces and markets biodiesel and such byproducts as corn gluten feed and meal, distillers products, carbon dioxide and brewers’ yeast.  

With plants in its hometown of Pekin, Ill., and another in Aurora, Neb., the company’s annual production capacity is around 207 million gallons. Planning for another plant in Indiana, along the Ohio River, is under way, and will bring the eastern Corn Belt into the company’s domain in late 2008 or early 2009.

Including its marketing alliances, the company marketed and distributed 697 million gallons of ethanol in 2006, or nearly 13% of the total volume sold last year in the United States. Customers include Royal Dutch Shell plc (NYSE: RDS.A), Marathon Oil Corporation’s (NYSE: MRO) Marathon Petroleum, BP plc (NYSE: BP), ConocoPhillips NYSE: COP), Valero Energy Corp. (NYSE: VLO), Exxon Mobil Corp. (NYSE: XOM) and Chevron Corp. (NYSE: CVX).

Since its July 2006 initial public stock offering, Aventine Renewable Energy’s shares have fluctuated substantially, following the ebb and flow of negative and positive news reports about alternative fuels. Other than for a few days after its IPO priced at $43, investors haven’t seen the stock trading anywhere near that level, with shares most recently idling in the $13-$16 range. During its first quarter as a public company, Aventine’s board authorized a $50 million share-repurchase plan.

If you've ever filled up your gas tank, ordered a meal at a fast-food drive-through or even bought a vehicle from an automotive dealership, chances are you have unwittingly contributed to the success of a little-known small cap.
 
The reason: LSI Industries Inc. (Nasdaq: LYTS), based in Cincinnati, Ohio, supplies indoor and outdoor lighting fixtures, signage, menu boards, LED displays, digital billboards and sports screens to the petroleum/convenience store, multi-site retail (including automobile dealerships, restaurants and national chain stores) and the commercial and industrial lighting markets.

LSI's client list reads like a veritable Who's Who in big business: Ford Motor Company (NYSE: F), General Motors Corporation (NYSE: GM), DaimlerChrysler AG (NYSE: DAI), Exxon Mobil Corporation (NYSE: XOM), BP plc (NYSE: BP), Chevron Corp. (NYSE: CVX), ConocoPhillips (NYSE: COP), McDonalds Corp. (NYSE: MCD), Burger King Corporation (NYSE: BKC), Wal-Mart Stores, Inc. (NYSE: WMT), Best Buy Co. Inc. (NYSE: BBY), CVS Pharmacies, Inc. (NYSE: CVS), Target Stores (NYSE: TGT)...the list goes on.

LSI's creations do the seldom-thought-of, but highly important job of providing essential illumination for businesses and strategic visibility for their products and services. Some of the company's more popular specialty designs are custom backlit menu boards, indoor and outdoor signs and graphics, decorative light fixtures, solid-state LED displays, and most recently, digital billboards.
 
Since having its stock downgraded to "sell" from "hold" by Matric USA analyst Daniel Scalzi on June 22 (after which the stock tumbled from more than $18 a share to $16.40), the visual image-solutions company has been lighting up far more than the usual. In late June, following news that the rollout of re-imaging programs by several large clients would boost the company's fourth-quarter and fiscal year results beyond expectations, LSI began grabbing attention, in a good way.

A recent infusion of big-time talent has things looking up for a beaten-down microcap software play in the human resource management sector.

After years of largely profit-less growth, Burlingame, Calif.-based Workstream Inc. (Nasdaq: WSTM) could finally be poised to turn the corner under a recently revamped management team. In February, Deepak Gupta, the former general manager and founder of PeopleSoft’s On Demand software unit, was named chief executive of tiny $56 million Workstream. Prior to PeopleSoft, Gupta was the chief architect of Oracle Corporation’s (Nasdaq: ORCL) hosting business and the global leader for the software giant’s middleware line.

Since the hiring of Gupta, a string of heavy hitters from established enterprise software leaders have also joined Workstream’s executive ranks. This impressive group of new sales & marketing hires hail from Oracle, PeopleSoft, International Business Machines Corp. (NYSE: IBM) and Kronos among other well-known software companies. While it remains to be seen if Gupta can charge up Workstream’s top-line growth and lead this microcap software play to profitability, he certainly has attracted a high-caliber management team that has tasted success before.

Founded a little over a decade ago, Workstream has historically focused its efforts on selling compensation, performance and talent management solutions to large enterprises (over 2,500 employees). Workstream’s 400 customers include such brand names as Wells Fargo & Company (NYSE: WFC), Nordstrom, Inc. (NYSE: JWN), Chevron Corporation (NYSE: CVX), E. I. du Pont de Nemours and Company (NYSE: DD), The Home Depot Inc. (NYSE: HD), the American Red Cross and the U.S. Federal Bureau of Investigation. In a bid to significantly expand its market opportunity, Workstream unveiled last month three new on-demand solutions for mid-sized businesses (between 100 and 2,500 employees). Workstream’s software frees companies from having to manually manage human resources processes using spreadsheets and paper documents for tracking.

Boulder, Colo.-based Dynamic Materials Corp. (Nasdaq: BOOM) is a leader in the explosion-welded clad metals market (a segment specializing in using an explosive process to fuse non-compatible metals—which cannot be welded by conventional processes—creating bonds that are stronger than the metals themselves). Dynamic Materials has made shrewd moves in the past few years, including key acquisitions in the United States and Europe. Today, the company controls as much as 40% of worldwide market share (predominantly in North America and Europe), though it still faces competition in Asia from Japanese player Ashai Kasei Corp. (OTC: AHKSY) and several Chinese companies.

Dynamic Materials supplies a diverse customer base, ranging from energy companies to shipbuilders to the aerospace industry. Key customers include Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX), General Electric Co. (NYSE: GE) subsidiaries GE Energy and GE-Aviation, Rohm & Haas Co. (NYSE: ROH), divisions of United Technologies Corp. (NYSE: UTX) Betchel, and Pratt & Whitney.

The year 2006 was good to Dynamic Materials. The company saw profits rise 42% with revenue growth of 30% (its stock has averaged annual returns of 208% over the past three years), earning it a seat on Fortune's 2006 list of the “100 Fastest-Growing Companies.” After a banner year, Debra Fiakas, CFA, an analyst with Crystal Equity Research, said her firm initiated coverage of Dynamic Materials “based on its growing dominance of the metals cladding market. Strong cash flow generation and a pristine balance sheet provide resources for future growth initiatives."

DMC's revenues totaled $33.1 million in the first quarter of 2007, a year-over-year increase of 32%. The company's backlog in the first quarter was $68 million, compared with just $34 million two years earlier. A record backlog is expected in the second quarter. These impressive numbers have helped propel Dynamic Materials to the eighth spot on Business Week's annual list of “100 Hot Growth Companies.”

Although much attention has focused on the strong performance of the major oil companies, far less has been reported about a related sector benefiting from rising energy demand - oilfield services providers. These companies provide technologies for drilling wells and boosting production. Demand for their services is cyclically linked to oil industry capital spending, which tends to be less volatile than oil prices.  

Energy prices remain near historic highs in 2007 as a result of global economic growth, rising demand from China and India, supply disruptions and political tensions in parts of Africa and the Middle East and a shortage of refinery capacity. 

High energy prices are fueling record levels of exploration and production spending. British Petroleum will increase capital spending to $18 billion in 2007 and targets annual production growth through 2012.  ExxonMobil increased spending to $20 billion in 2006 and plans to maintain capital spending in that range for several years. Chevron increased capital spending 50% in 2006 to $16.6 billion and plans to increase 2007 spending to $19.6 billion.