Markets Are Jittery , Investors Are Confused And The Guiding Light Is A Flicker In The Night

I mentioned in a previous article that oil prices will have a trading range for a while and right now we are at the bottom of that range. Crude oil falling below $80 for the first time since June of 2012 is important and what’s also important is that this is the fourth straight day, as of this article, of crude oil dropping.

Granted that when green technology advances the drop in crude oil, in my opinion, will bring it much lower over time but we are years away from that even getting any real traction.

As the onlookers and doomsday machines out there spread the gloom and doom of the markets, this drop in crude oil and the markets in general is actually a buying opportunity for investors, well for investors that can see the light beyond all the background noise. Trust me that hedge funds and private equity firms are looking to sop up all the juice that is left on the ground from investors fleeing for safety but what’s confusing is where is the danger?

A correction in any market is healthy, it straightens things out a bit and weeds out the hanger-on’s and creates opportunities for those that can see it. It can be the market as a whole or an individual stock, having a good broad view of an industry helps out a lot because it gives you the tools to connect the dots.

For instance you have many speculators racing for the next big stock that may be a beneficiary as the Ebola crisis heats up. This is not an epidemic in the United States or any other countries other than in West Africa, this is the first point. I lived in West Africa for a time and if people really knew the living conditions in some regions they wouldn’t be surprised of an outbreak of any disease, this is just the one that came back home. As a humanist I do want a quick cure for Ebola to come into play to help those people in West Africa that cannot afford the medical treatment BUT is that going to shake things up enough to give a massive boost to the company that develops it? In my opinion not really, it’s a great idea but I don’t see this as being a truly viable long term investment. Perhaps for a trading pop but it could come back to bite ya potentially if you’re not on top of it.

So the media hype will keep it in front of us but in the end I really don’t see it as being a major investment opportunity as the media paints the picture of an impending global disaster.

Jumping back to the oil arena, there is one company that I do think will benefit as the exploration for oil continues not only in the Middle East but in the United States. The company is called Geospace Technologies and they are in the business of manufacturing equipment that gathers and processes seismic data and monitors producing oil and gas reservoirs.

As I mentioned on the radio show “Money Never Sleeps” there is an oil exploration company in the Midwest that is actually making new discoveries, so with the need at this point to extract more oil out of the ground technology becomes pretty important.

The stock has been trading in the $27 to $30 range over the past five trading days but I don’t see this as a trade but more as a position that could pay off nicely in the next six months or so. With a P/E ratio of about 7.35 for a technology company, its not bad, granted its oil industry related however technology companies always evolve and I think in this case even longer term this could do very well.

A year ago November the stock traded over $100 per share it closed yesterday at $29.70.

It trades on the NASDAQ under the symbol GEOS, its worth a look but as with anything please do your own due diligence and make informed decisions.

Next one that may be a nice play on the dropping oil prices is Stone Energy, the company trades on the NYSE under the symbol SGY and they are an independent oil and natural gas exploration company. They are taking advantage of technology by implementing horizontal drilling techniques to extract natural gas from the Marcellus Shale in the Appalachian Basin.

What’s that mean? In plain English they can drill sideways to hit deposits that traditional drilling methods would not be able to hit, so hit the sweet spot and the spigots open up wide.

The stock has a 52 year high of $50 and its trading near its low which was $21.50, it closed at $24.16 on October 15, 2014. With a P/E of about 17.75 and a market cap of approximately $1.27 Billion I do think that this one may be primed for a rebound on a long term basis. I don’t see it as a short term trade but longer term I see the company making new discoveries and strategic alliances as technology advances.

Let me close out this article on the Ebola topic, I doubt that they will find that miracle cure anytime soon so this will breed fear as the media continues to implant that in the minds of their listeners and viewers. So this could adversely impact airlines as telecommuting to meetings may be a viable replacement for now, it may positively impact medical technology companies that be providing equipment and devices for hospitals preparing for more cases to arise and it will definitely put a spotlight on the quality of life in West Africa which I know all too well.

As always do not solely depend on the opinion of one person, do your own due diligence and become as informed of an investor as you could be. Otherwise consult with your financial advisor for professional guidance.

Feel free to contact me with your input or questions either on here, SeekingAlpha.com , Curbstreet.com or on Twitter @louisvelazquez

Louis Velazquez

Host – “Money Never Sleeps” Radio Show

www.louisvelazquez.com 

www.twitter.com/louisvelazquez

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