Connect with us

Stocks

3 Helium Stocks to Capitalize on The Shortage

We are actually in the middle of a global helium shortage. Let’s take a look at three helium stocks that could capitalize on this shortage.
The post…

Published

on

You might now have heard about it but we are actually in the middle of a global helium shortage. If this trend continues, it could cause the price of helium to skyrocket even higher than it already has. If this happens, it would result in record profits as well as soaring prices for helium stocks.

The State of the Current Helium Shortage

To be fair, this year has had quite a few major news stories. To name just a few, there is the land war in Europe, record inflation and a billionaire buying Twitter like he was shopping for a new car. It’s no wonder that the helium shortage is getting buried in the news cycle. On top of that, there have also been plenty of shortages recently. So many, in fact, that’s it’s getting hard to keep track.

For example, there was a shortage of toilet paper, masks and medical equipment almost immediately after the pandemic started. Shortly after, computer chips fell into a shortage. This chip shortage then led to a low supply of many products, such as new cars. More recently, there is a shortage of baby formula. Now, it’s helium.

At first glance, a helium shortage might not sound like the end of the world. Most of us really only ever use helium to fill up balloons. But, helium is actually used in a lot more industries than you might think.

Helium is used in hard drives, scientific research, medical MRIs, supercomputing and space travel. Notably, government agencies like NASA and the Department of Defense rely heavily on NASA. This fact alone is reason to believe that helium mining will quickly become a priority.

Helium, like natural gas, is also a non-renewable resource. This means that there is a finite amount that can be extracted from the Earth. The companies that can get ahead of this shortage and boost the supply will surely line their pockets doing so. With that in mind, let’s take a look at three helium stocks that could capitalize on the current shortage.

Top Helium Stocks to Buy Now

No. 3 Total Helium (CVE: TOH)

Total Helium is almost as young as the helium shortage itself. It was formed after Wintertide Ventures merged with Brooks Energy Company in 2021. The organization later renamed itself Total Helium. This company might be a newcomer in the helium industry. But, it’s already got its hands on a valuable asset. Namely, North America’s largest conventional onshore natural gas and helium field.

This gas and helium field is called the Hugoton Gas Field and is located in Western Kansas. Boltz35B is an 86,000-acre drilling project that plans to extend this field.

In regards to drilling, Total Helium is really just getting the ball rolling. It started trading on ​​The TSX Venture Exchange on November 11, 2021. Just three days later, it started drilling in Boltz 35B. Impressively, it has already landed a purchase agreement to sell its helium. It struck a deal with an unnamed leading global industrial gases company that committed to buying helium from Total Helium.

Total Helium has received two payments of $950,000. If its drilling operations continue to be successful, it has a good chance of being one of the best helium stocks to buy during 2022.

No. 2 Desert Mountain Energy (CVE: DME)

Another one of the best helium stocks to buy is Desert Mountain Energy. Desert Mountain Energy owns mineral leases to 85,000 acres of land in Northeastern Arizona. This another hotbed area that’s known to be rich in helium. Desert Mountain Energy has already drilled four wells on this land. Notably, it also completed this drilling process entirely with equity. Desert Mountain Energy currently has no debt on its wells.

On top of that, it has enough cash to complete a well on the McCauley Helium Field. It plans to make this well operational as early as Q3 2022. Desert Mountain Energy shows no sign of slowing down anytime soon. It plans to build 60-70 more wells on its leased area over the next 5 years. For this reason, it could remain one of the best helium stocks to buy and hold for the immediate future.

Helium Stocks No. 1 Air Products & Chemicals Inc (NYSE: APD)

Those first two helium stocks are pure plays. This means that they pretty much exclusively mine helium. Additionally, they are both much younger companies. For this reason, investing in them based on the helium shortage could yield higher returns. However, they are also both slightly risky. If something happens to their main projects then they won’t have much other revenue to rely on. Air Products & Chemicals, on the other hand, is much more diversified.

Air Products & Chemicals is a global supplier of dozens of gases. This includes argon, carbon dioxide, carbon monoxide, oxygen, hydrogen, nitrogen and helium. As far as its helium business, it has developed leading technology for extraction, production, distribution and storage.

Air Products & Chemicals is also already highly profitable. It posted a 2021 annual revenue of $10.32 billion and a net income of $2.1 billion. If you are looking for a slightly safer helium stock, Air Products & Chemicals is a good choice.

Before leaving you, I have one last comment that’s applicable to all of these helium stocks. Before investing in helium stocks, be sure to thoroughly research the company. This step is also crucial, but particularly so for natural resource companies. These companies almost always need to jump through regulatory hoops in order to begin mining. This process also includes environmental impact statements. If a company doesn’t have the proper approval, it could delay its drilling for months and sometimes even cancel it altogether.

I hope you’ve found this article valuable in learning about a few helium stocks to buy. Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.

The post 3 Helium Stocks to Capitalize on The Shortage appeared first on Investment U.

Read More

Continue Reading

Stocks

Zillow Case-Shiller Forecast for May: Slowing House Price Growth

The Case-Shiller house price indexes for April were released this week. The “April” report is a 3-month average including February, March and April closings.  So, this included price increases when mortgage rates were significantly lower than today. Th…

Published

on

The Case-Shiller house price indexes for April were released this week. The "April" report is a 3-month average including February, March and April closings.  So, this included price increases when mortgage rates were significantly lower than today. This report includes some homes with contracts signed last December (that closed in February)!

Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.

From Zillow Research: April 2022 Case-Shiller Results & Forecast: Putting on the Brakes
With rates continuing their steep ascent and inventory picking up in months since, April is likely the first month of this deceleration as buyers balked at the cost of purchasing a home and pulled out of the market, leading to slower price growth. While inventory is improving, there is still plenty of room to go before it reaches its pre-pandemic trend. Still, coupled with relatively strong demand, that will continue to be a driver for sustained high prices even as sales volume is dropping in response to affordability constraints. As a result, more buyers will take a step to the sidelines in the coming months, which will help inventory to recover and price growth to slow from its peak, leading the market back to a more balanced stable state in the long run and providing more future opportunities for homeownership for those priced out today.

Annual home price growth as reported by Case-Shiller are expected to slow in all three indices. Monthly appreciation in May is expected to decelerate from April in both city indices, and hold in the national index. S&P Dow Jones Indices is expected to release data for the May S&P CoreLogic Case-Shiller Indices on Tuesday, July 26.
emphasis added
The Zillow forecast is for the year-over-year change for the Case-Shiller National index to be 19.5% in May. This is slightly slower than in February, March and April, but still very strong YoY growth.

Read More

Continue Reading

Spread & Containment

Airline stocks have been beset by external problems but could now be a good time to invest in a sector many think is in crisis?

It’s fair to say it has been a tough couple of years for the commercial aviation sector and investors in airline stocks. In 2019 the sector enjoyed record…

Published

on

It’s fair to say it has been a tough couple of years for the commercial aviation sector and investors in airline stocks. In 2019 the sector enjoyed record passenger numbers and 2020 was expected to be better yet. Low cost airlines were expanding aggressively, as they had been for years, and national carriers, in response, had made strides in cutting costs and introducing other efficiencies.

Then the Covid-19 pandemic struck, devastating the sector. Over the early part of the pandemic when international travel was severely restricted, airlines operated skeleton schedules. Severely reduced capacity, and schedules regularly interrupted by new lockdowns and shifting government policies bedevilled the sector for the next two years.

Even over the past few months which have seen most pandemic-related travel restrictions drop, a spate of new problems has hampered the sector’s recovery. Staff shortages, the result of a combination of the continuing need for those that become infected with Covid-19 to isolate and a tight labour market, have been a major headache. London-listed easyJet recently cut its capacity forecasts as a result of staffing issues.

And last week over 700 Heathrow airport staff voted to strike over the peak summer period, which promises chaos, and hundreds of cancelled flights, if an agreement can’t be reached over pay in the meanwhile. Staff at three Spanish airports are also calling for industrial action this summer and strikes are a threat elsewhere around Europe’s favourite holiday destinations.

Sky high fuel costs will also put pressure on margins this summer and potentially well into next year and a growing cost of living crisis sparked by inflation levels at 40-year highs will not help demand.

Airline share prices have predictably slumped since the onset of the pandemic. EasyJet’s valuation is down over 50% in the past year and over 75% since summer 2018. Its shares haven’t been worth as little as they currently are since early January 2012.

easyjet plc

Hope on the horizon?

But despite the fact the immediate future still looks tough for airlines, there are a number of reasons why investors might consider dipping into their stocks now or in the months ahead.

The first is that the bulk of the problems that have crushed airline valuations over the past couple of years have been external factors outwith control and unrelated to the underlying quality of companies. They are also all problems that are expected to be temporary and will ease in future. Covid-19 restrictions are, with the notable exception of China, no longer a big issue and hopefully won’t return. And even China recently reduced its mandatory quarantine period for anyone arriving in the country from two weeks to seven days.

That’s still problematic but a sign that an end to the dark cloud of the pandemic may finally be in sight. Most airlines were forced to either take on significant new debt or raise cash through equity issues that diluted existing shareholders, or through mechanisms such as selling and leasing back aircraft.

It will take time for that gearing to be unwound and balance sheets brought back to health. But the sector will eventually recover from the pandemic which should see higher valuations return, providing a buying opportunity at current depressed levels.

Airlines that have come out of the pandemic in the strongest positions will also likely gain market share from weaker rivals, improving their future prospects. British Airways owner IAG, for example, currently has access to more than £10 billion in cash after raising capital to cover losses over the pandemic. EasyJet has access to £4.4 billion. That means both should be well placed to cover any continuing short term losses until passenger numbers return to 2019 levels and push their advantage over less well-capitalised rivals.

Both IAG and easyJet have also seen their passenger capacity improve significantly in recent months. Over the all-important summer quarter to September, the latter expects its passenger capacity to reach 90% of 2019 levels despite the ongoing operational challenges. IAG expects to return to 90% of 2019 capacity over the last quarter of the year.

A full recovery to 2019 levels is possible by next year even if higher costs are likely to mean ticket price increases are inevitable. That does pose a risk for near-term leisure travel demand but there is confidence that remaining pent-up demand from the pandemic period will help soften the impact on discretionary spending on international travel that might have otherwise been more pronounced. Western consumers have also, the pandemic period apart, become so accustomed to taking foreign holidays that some analysts now question if they should still be considered discretionary spending rather than a staple.

Despite the transient and external nature of the problems that have hit easyJet’s valuation, not all analysts are convinced the current share price offers good value even despite its depressed level. They still look relatively expensive given the risks still facing the sector at a forward price-to-earnings ratio of close to x160.

iag

IAG could offer better value, currently trading at a price-to-earnings ratio of just x5.8 for next year. It is also expected to reverse return to a healthy profit by 2023. The company also has exposure to the budget airline market through Vueling and Aer Lingus and while it abandoned its move to take over Air Europa late last year it shows it has ambitions to further expand in this area. And it has plenty of capital available to it to make major acquisitions that could fuel growth when the sector recovers.

IAG’s cheap valuation does reflect the risks it faces over the next couple of years but for investors willing to take on a little more risk the potential upside looks attractive.

A dollar-denominated airline stock play

On the other side of the Atlantic, American airlines also suffered during the pandemic but are now recovering strongly. For British investors, dollar-denominated U.S. stocks also offer the attraction of potential gains in pound sterling terms as a result of a strengthening U.S. dollar. The Fed’s more aggressive raising of interest rates compared to the ECB or Bank of England is boosting the dollar against the pound and euro and it is also benefitting from its safe haven status during a period of economic stress.

One U.S. airline that looks particularly interesting right new is Southwest Airlines, the world’s largest low cost carrier. The USA’s domestic travel market has recovered so strongly this year that Southwest expects its Q2 revenues to be 10% higher than those over the same three months in 2019. It’s already profitable again and earnings per share are forecast to come in at $2.67 for 2022 and then leap to $3.84 in 2023. It’s a much more profitable operator than easyHet.

It also, unusually for an American airline, hedges a lot of its oil. That’s expected to see it achieve much better operating margins this year, predicted to reach 15.5% in Q2,  than other airlines being hit by much higher fuel costs. The company isn’t immune to the risk of the impact the inflationary squeeze could have on leisure travel but is seen as one of the most resilient airlines in the sector. It could be a better bet than either of its two London-listed peers.

The post Airline stocks have been beset by external problems but could now be a good time to invest in a sector many think is in crisis? first appeared on Trading and Investment News.

Read More

Continue Reading

Stocks

Falling VIX Spells BIG Trouble For The Bears

If there’s one thing that a bear market – secular or cyclical – feeds on, it’s fear. The further the drop, the bigger the spike we see in the Volatility…

Published

on

If there's one thing that a bear market - secular or cyclical - feeds on, it's fear. The further the drop, the bigger the spike we see in the Volatility Index ($VIX). From the CBOE.com website, the VIX "measures the level of expected volatility of the S&P 500 Index over the next 30 days that is implied in the bid/ask quotations of S&P options. Thus, the VIX is a forward-looking measure..." So let's be clear about this. The VIX does NOT measure what's happening now or what just happened last week. Instead, it looks forward to determine expected volatility. High volatility is generally associated with falling equity prices and low volatility typically accompanies rising equity prices.

As fear dissipates, expected volatility drops, and bear markets end. That's the historical formula. Let's start off by looking back to the financial crisis in 2008 and how the spiking VIX unfolded:

The VIX topped in October 2008 and though the S&P 500 hit two lower price points, the bear market ran out of sellers as fear came tumbling down in late 2008 and into the first quarter of 2009.

During the market turbulence in 2014-2016, we saw a somewhat similar pattern:

Q4 2018 was a very short cyclical bear market (less than 3 months), as was the pandemic-led selling in March 2020 (4 weeks), so there really wasn't much time to evaluate the VIX at various low points, but currently we're seeing a similar pattern in the cyclical bear market of 2022:

But the action on the VIX was really strange this week. The S&P 500 saw selling pressure once again, yet the VIX finished very close to a 3-week low. Check out this 1-month 30-minute chart:

From mid-day on Thursday through the early morning Friday, the S&P 500 fell from 3820 to 3750 and the VIX was dropping right along with it. That's extremely unusual behavior. The VIX is looking ahead and it's pricing in less volatility. That suggests that we're being given a signal of a rally ahead. That's the reason the VIX goes down. Less volatility means higher equity prices.

We're heading into a fresh quarterly earnings season and I'll be featuring one company that I believe is poised to make a big run into its quarterly earnings report later this month. To read about it in our next newsletter article, simply CLICK HERE and sign up for our FREE EB Digest newsletter. It only takes a name and email address. There is no credit card required and you may unsubscribe at any time.

Happy trading!

Tom



Read More

Continue Reading

Trending