Two days ago, the emerging oil and gas company Subsea 7 rolled out the first commercial autonomous inspection vehicle.
The company plans on building a series of these that will be able to inspect drill rigs using cameras — and a whole host of other instruments.
The robots are useful for inspecting risers, manifolds, and well heads.
What’s new about these particular robots is that they no longer have a tether, but use batteries.
Look for these robots in the field before the end of the year.
Subsea 7 has a P/E of 18 and pays a 21-cent dividend.
Subsea and other oil and gas service companies like Hercules (HERO) and Chicago Bridge and Iron (CBI) — up 200% since I told you about them — should benefit from the expansion of exploration now being driven by high oil prices.
China Blackouts
Xinhua is reporting recent power shortages across many Chinese provinces, and peak demand won’t hit until the middle of summer.
The China Electricity Council said that it would be short 30 million kilowatts, depending on coal supply and water levels.
The industry-heavy Zhejiang Province has had the worst shortages since 2004, and some provinces are rationing services. Xinhua reports:
China’s demand for electricity has grown robustly this year, in accordance with the country’s rapidly expanding economy. According to recent data from the CEC, electricity consumption for the first quarter of 2011 rose 12.7 percent over the previous year to exceed one trillion kwh.
Prices for coal in China have been climbing steadily weekly since March 17th; they hit a new high of 808 yuan (124.3 U.S. dollars) per ton between April 20 and 26.
I own a number of coal companies in the Crisis & Opportunity portfolio to take advantage of this very situation.
One is up 361% as I write this.
Time to Shoot LULU
A friend of mine, Andrew Mickey, told me about Lululemon (LULU) two years ago when it was at $10 or so.
I said, “There is no freaken way I’m buying a company that makes high-end yoga pants…” or something to that effect.
I was completely wrong.
LULU was off like a prom dress. It’s up 900%.
I am now seeing their $200 spandex pants everywhere. When I was visiting Chincoteague, Virginia, two weeks ago, it seems every beamy Canadian mom was sporting a pair of these black beauties.
{$custom_SIGNUP_EAC}
Now, I don’t know much about fashion, but I do know this: When mom starts sporting the hip cloths, they are no longer cool.
LULU has fat margins (19%), no debt, and rapid growth (92% year-over-year). But it does have a price-to-earnings ratio of 56.49 — the steepest in its class.
It won’t be a short in my book until it breaks trend, but it’s definitely one to avoid.
These stocks tend to fall as fast as they go up.
Remember Crocs (CROX)?
Later,
Christian DeHaemer
Editor, Energy and Capital
