CHICAGO, May 27, 2011 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: United States Gasoline (NYSE: UGA), Baker Hughes (NYSE: BHI), Cabot Oil & Gas (NYSE: COG) and Suncor Energy (NYSE: SU).
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Profit from Pain at the Pump
I am not sure how they rank in order but the weather and gas prices have to be 2 of the most common gripes so matter where you are in the country, although particularly here in Chicago.
And they do have something in common; you can't do a damn thing to change either one.
Like a Rocking Chair
Articles, news casts and neighbors can shake their fists at the rising cost of gas, but the one thing I notice that very few, if any, do is offer a solution. Which reminds me of a variation of an old adage; Complaining is like a rocking chair, it gives you something to do but doesn't get you anywhere.
When it rains, you grab an umbrella. When it's cold, you bundle up. You cope. But with rising gas prices people tend to just take the abuse. And I don't understand why.
Can't Beat 'em? Join 'em
Why not hedge your fuel expenses with your portfolio? Load up on companies that will do well in the event of rising energy prices. It will still sting as you unload your wallet to fill up the tank, but that pain can be soothed by seeing green in your portfolio.
I guess one of the easiest routes would be to buy some United States Gasoline (NYSE: UGA), which is an ETF seeking to match the percentage movements in the price of gasoline.
But some stocks make good options as well. Of course they will have fluctuations based on company specific events, but take a look at Baker Hughes (NYSE: BHI). They provide drilling, pressure pumping and other related products and services to the oil and gas industry.
Estimates for BHI jumped on their quarterly results in late April. Analysts unanimously raised forecasts for this year, raising the consensus 28 cents, to $4.09. Next year's average estimate is $5.28, up 40 cents in the past month. That puts growth rates at 79% and 29% and give the stock a Zacks #1 Rank (Strong Buy).
Unlike the price of unleaded, shares of BHI are trading with discounted growth rates. The PEG ratio is just 0.7 times.
Also, take a look at how closely share trade with UGA. This is a 1-year comparison chart with BHI in black and UGA in green.
Cabot Oil & Gas (NYSE: COG) is a Zacks #1 Rank (Strong Buy). COG is an independent oil and gas company engaged in exploration, development, acquisition and exploration in the U.S.
The Zacks Consensus Estimate is up 27 cents, to $0.99, in the past 3 months. Next year's estimates are averaging $1.91, up 59 cents. That gives them a modest 1% growth rate in 2011 but should almost double next year.
Shares of COG are trading even closer to UGA than Baker Hughes has been.
Suncor Energy (NYSE: SU) is an integrated oil and gas company in Canada. Shares are a also a Zacks #1 Rank (Strong Buy) thanks to rising estimates.
After posting back to back surprises, analysts continue to get even more bullish on SU. The Zacks Consensus Estimate for this year rose 40 cents to average $2.82, which is a 62% growth rate.
Next year analysts are looking for a more modest, but still solid, 14% growth rate. The Consensus is up 22 cents, to $3.23. The stock is trading at just 15 times forward estimates and with a PEG of 0.6.
Fight Back
These are just a few of the companies, and an ETF, of the many out there that can help you hedge against the rising price at the pump. Get creative and think outside the box the next time you feel the pain at the pump.
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