STR - $79.00 Questar Corp ** Stop Loss $70 **
Questar moved sideways for the week with investors confused about its relationship to gas. Questar is a diversified company with its talons in almost every area of U.S. gas exploration, production, trading, distribution and marketing. Because of its diversification should provide less risk going forward but a sharp drop in gas could be damaging from guilt by association.
STR did not trade below $75 so we are still naked on the Put insurance. We are not going to buy the put unless we are hit with a decline. I would rather not stop, reenter, stop, reenter and therefore the wide stop and the potential for put insurance instead of a tight stop.
Questar Corporation (Questar) is a natural gas focused energy company with three principal lines of business gas and oil exploration and production, interstate gas transmission, and retail gas distribution. Questar conducts most of its operations through its subsidiaries Questar Market Resources (Market Resources), Questar Pipeline Company and Questar Gas Company (Questar Gas). Market Resources is a sub-holding company that owns Questar Exploration and Production Company (Questar E&P), Wexpro Company (Wexpro), Questar Gas Management Company (Gas Management) and Questar Energy Trading Company (Energy Trading). Questar Pipeline provides interstate natural gas transmission, storage and gas processing and treating services. Questar Gas conducts retail natural gas distribution.
April $85 Call STR-DQ @ $5.60
Entry $78.76 (10/31)
COP - $66.20 Conoco Phillips ** Stop Loss $59 **
Conoco rallied sharply early in the week and failed to give much back on Friday. Conoco announced that their budget for exploration in 2006 would rise by +127% compared to Exxon's +25%. Rather than rest on their reserves COP is dedicated to increasing those reserves. COP is still my favorite oil stock for a long term hold.
Due to the rise in price I cancelled the potential put insurance and raise the stop to $59.
Earnings were Oct-27th
ConocoPhillips is an integrated energy company. The Company's business is organized into six operating segments. The Exploration and Production segment primarily explores for, produces and markets crude oil, natural gas, and natural gas liquids on a worldwide basis. The Midstream segment gathers and processes natural gas produced by ConocoPhillips and others, and fractionates and markets natural gas liquids. The Refining and Marketing segment purchases, refines, markets and transports crude oil and petroleum products. The LUKOIL Investment segment consists of the Company's equity investment in LUKOIL, an international, integrated oil and gas company. The Chemicals segment manufactures and markets petrochemicals and plastics on a worldwide basis. The Emerging Businesses segment encompasses the development of new businesses, including new technologies related to natural gas conversion into clean fuels and related products, technology solutions, power generation and emerging technologies.
2007 $70 LEAP Call OJP-AN @ $6.40
Insurance Put: Cancelled - no entry
Entry $63.25 (10/31)
MO - $74.03 Altria Group ** Stop Loss $71 **
MO failed to impress this week with an early week break over the resistance at $75 but a weak decline into Friday. This is a long term play based on the coming events but I would like to see an upward trend appear soon.
Yes, MO, not an energy stock but one with special events in its future. The tobacco suits and legislation appear to be winding down but MO is taking no chances. Altria is taking steps to distance itself from the eventual decline of the tobacco business and will be spinning off the tobacco side sometime in 2006. Altria I working to upgrade its non-tobacco image and will be divesting itself of other non-core assets. Barron's expects Altria to split into three separate companies in 2006 and release lots of pent up shareholder value. As long as Altria is hampered by the tobacco image and all the claims it can never receive a true valuation on the rest of its very profitable businesses. An insurance put is a must given the unpredictability of the legal cases.
Altria Group, Inc. (ALG), through its subsidiaries, Philip Morris USA Inc. (PM USA), Philip Morris International Inc. (PMI) and Kraft Foods Inc. (Kraft), is engaged in the manufacture and sale of cigarettes, tobacco products, branded foods and beverages. PM USA and PMI are engaged in the manufacture and sale of cigarettes in the United States and internationally, respectively. Kraft is engaged in the manufacture and sale of branded foods and beverages in the United States, Canada, Europe, the Middle East and Africa, Latin America and Asia Pacific. Kraft manages two units, Kraft North America Commercial (KNAC) and Kraft International Commercial (KIC). The Company operates in five business segments, such as Domestic tobacco, International tobacco, North American food, International food and Financial services, which accounted for 27.7%, 41.2%, 24.3%, 5.9% and 0.9%, respectively, of the Company's income during the year ended December 31, 2004.
2007 $80 LEAP Call VPM-AP @ $5.50
Buy the put now instead of on a trigger since legal announcements tend to appear suddenly.
Entry $75.00 (10/31)
UNH - $58.10 Unitedhealth Group ** Stop Loss $50 **
It was a great week until Thursday with UNH up to $59.90 before sector news cratered it on Thursday. Profit taking took hold and the Friday rebound was limited. The trend is still up and this should be just a pause. If we get any follow through next week I will cancel the put insurance and raise the stop. I just want to be careful considering the amount of profit in the stock.
UnitedHealth is the leader in the managed heathcare sector. Earnings are soaring, +31% in Q3 to $2.43 billion and the outlook is only up. With health care costs rising more and more companies will turn to UNH to lessen their benefit expenses. We are also expecting a seasonal bounce now that October is behind us. There were two strong sell cycles in October as funds took profits from a long period of gains. Historically health care companies have done very well over the next three months as funds look for safe havens for year-end cash. UNH gained +37% from the October lows for the same period in 2004. Buyers appear on every dip to the 100-day average currently at $53.
UnitedHealth Group Incorporated is a diversified health and well-being company, serving approximately 55 million Americans. The Company provides individuals with access to healthcare services and resources through more than 460,000 physicians and other care providers, and 4,200 hospitals across the United States. It manages approximately $60 billion in aggregate annual healthcare spending on behalf of more than 250,000 employer-customers and the consumers it serves. The Company conducts its business primarily through four operating divisions: Uniprise, Health Care Services, Specialized Care Services and Ingenix. On July 29, 2004, the Health Care Services business segment acquired Oxford Health Plans, Inc. (Oxford). Oxford provides healthcare and benefit services for individuals and employers, principally in New York City, northern New Jersey and southern Connecticut.
2007 $60 LEAP Call VUH-AL @ $6.40
Entry $56.75 (10/31)
BTU - $81.36 Peabody Energy ** Stop loss $73.00 **
Peabody had another stellar week but gave back -$3 on the Friday profit taking and the drop in gas prices. There is nothing on the horizon that could impact coal prices but lower gas can impact the stock price. We need winter weather to appear to push BTU to a new high over $87.
Earnings were OCT-18th
Peabody Energy Corporation (Peabody) is a private-sector coal company in the world. During the year ended December 31, 2004, the Company sold 227.2 million tons of coal. It sells coal to over 300 electricity generating and industrial plants in 16 countries. The Company owns, through its subsidiaries, majority interests in 32 coal operations located throughout all the United States coal producing regions and in Australia. Most of the production in the western United States is low-sulfur coal from the Powder River Basin. In the West, it owns and operates mines in Arizona, Colorado, New Mexico and Wyoming. In the East, it owns and operates mines in Illinois, Indiana, Kentucky and West Virginia. The Company owns four mines in Queensland, Australia. Most of the Australian production is low-sulfur, metallurgical coal. In addition to the mining operations, the Company markets, brokers and trades coal.
MAR 2006 $80 CALL BTU-CP @ $6.70
Entry $73.88 (10/23)