Tag - Mro

Small-cap stocks stormed out of the gate with a flourish this morning, as buyers were enamored with yet another rally in overseas markets and happy that a sobering GDP report in the United States wasn’t even worse. At 9:51 a.m. ET, the Russell 2000 (NYSE:IWM) was up 16.79, or 3.42% at 507.67.

The GDP report this morning came in at minus 0.3%, which marked the steepest contraction in seven years and is consistent with recession-style growth readings. Despite that gloomy picture of the economy, it wasn’t as bad as feared, with the forecast pointing for a dip of 0.5% in economic activity. While GDP was on center stage this morning, the weekly claims figures also came out and were slightly above the forecast, coming in at 479,000 versus expectations for 475,000.

“Economic activity contracted mildly in Q3 with large gains in net exports, inventory investment, and government spending being more than offset by significant weakness in consumer spending, residential investment, and business investment,” Steven Wood, chief economist with Insight Economics, said in an email. “Economic activity was also dampened in September by Hurricanes Gustav and Ike and by the strike at Boeing. However, the full effect of the credit crunch has yet to be felt. While the economy slipped in Q3 it will fall much more sharply in Q4. Our early estimate for Q4 is a decline of 3.5%,” Wood said.

Consumer spending tumbled 3.1% in the third quarter, marking the first decline in 17 years, and the economy has been struggling even more since then, which is a scary proposition heading into the holiday buying season when the U.S. economy is driven heavily by consumer spending.

One has to wonder if some of the strength today also was tied to correcting back some of the late slide from Wednesday’s close, when a story about General Electric’s CEO talking about maintaining profits even if revenues fall 10% to 15% in 2009 appeared to be taken out of context and sparked a panic program trading sell-off in the Dow that also sliced away gains in small caps. There was talk of . . .

Small-cap stocks are expected to open sharply higher, boosted by gains in global equities overnight, an improved tone in commodities and a tame GDP report. Stock index futures were up about 2.8% before and after the GDP release, which suggests a Russell 2000 (NYSE:IWM) opening near 505.50.

The GDP report came in at minus 0.3%, slightly better than the forecast for a decline of 0.5%. Although the headline figure wasn’t as bad as feared, this still marked the sharpest contraction in economic activity in seven years, and economists fear that the pullback in growth has sharpened even more in recent weeks.

Stock markets around the world were in rally mode overnight, with the world stock index up 2.5%, powered by steep gains in some Asian markets. Hong Kong shot up some 10% and Taiwan was up 6% as those countries announced rate cuts following the Fed’s rate cut Thursday. Emerging markets also were on a roll overnight, climbing some 8%.

Energy stocks were in the spotlight today, with Exxon Mobil Corp. (NYSE:XOM), the world’s largest publicly traded company (Volkswagen’s bizarre intraday reign at the top of the heap was very brief earlier this week) reporting earnings this morning. XOM beat the forecast and reporting a whopping quarterly profit of more than $14 billion. XOM shares were up about 1% in pre-market activity. Apache Corp. (NYSE:APA) and Marathon Oil (NYSE:MRO) are also slated to release results today.

Crude oil futures were up about $1 heading toward the opening, and commodities were on firm footing again today after a big rally Wednesday that provided a lift to small caps. The U.S. dollar was down against this morning versus the euro, . . .

Rex Energy Corporation (Nasdaq: REXX) is a small-cap lion on the prowl to find those elusive oil and gas pockets in some of the oldest regions left untouched and abandoned by many of the biggest companies.

Riding a wave of improved drilling techniques, better exploration technologies and soaring demand, Rex Energy is off to a fast and furious start as a public company. With oil and natural gas prices shooting to stratospheric heights, smaller companies with a track record and decent potential have enticed investors to take notice.

Since emerging through an initial public offering last summer from a melange of partnerships and tiny entities, Rex Energy has roared to life with a steady stream of announcements of added drilling acreage and project successes.

Industry analysts have issued favorable reports on Rex Energy, with Thomson Financial finding that the five firms following the company have given the stock either a “buy” or “strong buy” rating.
 
The trading range for Rex Energy shares since the late-July IPO at $11 has been fairly wide, with the low of $7.55 coming last Sept. 14 and the $17.95 high seen on Feb. 26, following the release of impressive fourth-quarter results, discounting one-time charges. Shares have declined since then (closing at $16.25 on Wednesday), mostly on the overall market’s sour mood and a speedup in the announced departure of company president Thomas Shields. The stock offering did allow Rex Energy to pay off three-quarters of its outstanding debt and set up a new credit line.

Not all microcaps have recovered since the August market meltdown, which could spell opportunity for investors who are looking in the right places and are willing to roll the dice.

Case in point is South Bend, Ind.-based MISCOR Group, Ltd. (OTC: MCGL). Shares of the scrappy $40 million market capitalization industrial services provider have been sliced in half since July. Over this time, the only news out of MISCOR has been the release of its fiscal second quarter earnings report. Earnings weren’t great, but they certainly weren’t bad either.

While microcap MISCOR trades on the lowly OTC Bulletin Board, it has been on our radar for the past year, given that it has a very credible major financial backer in hedge fund group Tontine Associates. Headed by Jeffrey Gendell, Tontine has wracked up 35%-plus net returns per year on average. In January, MISCOR shares began a sharp rally upon the announcement that Tontine had invested $12.5 million in the company as part of a recapitalization.

MISCOR shares hit a high of $0.45 in mid-July before beginning a sharp retreat. As of this writing, MISCOR shares are changing hands for just $0.205, almost in line with the $0.20 a share that Tontine paid for the stock in its January private placement. Tontine isn’t infallible (one of its hedge funds has performed poorly this year), but whenever we can buy a stock near the price a smart hedge fund paid for its position, we generally sit up and take notice.  

Founded in 2000 by industry veteran John Martell, MISCOR has grown into a 450 employee company with 13 service centers in five states through a combination of acquisition and organic-driven growth. Ranked on the Inc. 500 list in 2004 and 2005, MISCOR’s goal is to build a national leader in the unglamorous, but underserved and growing industrial services sector. Blue chip clients include names like United States Steel Corporation (NYSE: X), Luxembourg-based ArcelorMittal, Union Pacific Corp. (NYSE: UNP), CSX Corporation (NYSE: CSX), Marathon Oil Corporation (NYSE: MRO) and France-based Alstom S.A. 

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.

Syntroleum Corp.’s (Nasdaq: SYNM) stock continued to climb in after-hours trading Friday when the Tulsa, Okla.-based firm announced it had swung to a first quarter profit.

Shares closed up $0.18, or 6%, to $3.15 in the regular session and by 5:04 p.m. ET had risen by another $0.15, or 4.8%, to $3.30. The stock has traded between $2.45 (on Nov. 28) and $7.75 (on May 11, 2006) in the past year.

For the three months ended March 31, Syntroleum posted net income of $14.8 million, or $0.26 per share, on revenue of on $13.8 million, versus a net loss of $12.9 million, or $0.23 per share, on revenue of $428,000 in the year-ago period.