Today, at 1:40-1:47pm EST, I’m appearing on CBS Radio WBBM Business Noon Hour w/ Chris and Sherman. They want to talk about 3 stocks – Chevron, (CVX: 77.45 +0.68 +0.89%), Goldcorp (GG: 43.80 +0.39 +0.90%) and BHP Billiton (BHP: 70.20 +0.06 +0.09%). They pick the stocks and ask me to give an opinion on them. Here is the brief I sent them …
Overview – within the past few weeks, basic materials, including energy, gold and iron and copper mining stocks have become market leaders.
Stock #1 CVX
Crude oil has been in a range since October. It’s now near the top of that range, and increasing demand in China, India and the U.S. is making investors bullish on energy stocks.
Oil is 64% of the value in Chevron. Its sales rose 7.7% in the fourth quarter, beating the industry, while its net income fell 37.3%, underperforming the industry. While Chevron has rallied since February, it has underperformed the rally in oil. It pays a nice dividend of 2.7% — I want to like this stock – but I’d pass for now. Consider an oil exploration and production ETF like the (IEO: 49.36 +0.49 +1.00%).
If CVX breaks support at 70, it could go to 57.
Stock #2 – Goldcorp
Gold was in a bearish trend but has switched back to a neutral trend, and has upside potential. This is helping miners like Goldcorp.
Gold miners tend to outdo gold on both the upside and downside. Since gold was having a bad couple of months, Goldcorp had a really bad couple of months. It also underperformed in its most recent quarterly report. But it increased its reserves in February – the sixth year in a row it’s done that — it has made up ground nicely in recent weeks, and Goldcorp could outperform gold in the weeks ahead.
Goldcorp needs to close decisively above 39.50. If it does that, it could head to 49.
Stock #3 — BHP
Base metal miners have been doing very well lately, as China’s economic miracle kicks into higher gear. BHP mines everything from iron to copper to uranium.
BHP is underperforming the SPDR Metals and Mining Index, but that shows that the real action has been in smaller-cap stocks. Both the XME and BHP are headed higher. My target for BHP is 87 – another $10 per share on the stock.
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