This one is a purely speculative play. High risk, high reward.
Are the riots and demonstrations in the Middle East frightening you? They should be if you care about your quality of life that is so dependent on Middle East oil. From an investing standpoint, the turmoil puts a spotlight on the sector and demonstrates once again why crude should be part of your portfolio.
With the increase in oil prices over the last decade, there are very few stocks trading for less than $5 to exploit. One possibility is Hercules Offshore (HERO). The oil spill in the Gulf of Mexico last summer nearly killed this company.Shares of Hercules fell to nearly $2 per share in the wake of the disaster, but the collapse was shortsighted. Eventually the oil spill in the Gulf was contained. Longer-term there simply is no choice but to drill offshore, spill risk or not. Now, with oil crossing $100 per barrel, drilling in the Gulf is fait accompli. That bodes well for Hercules, a company on track to lose 55 cents per share in 2010 and expected to lose the same in 2011. I think those numbers are a bit too pessimistic. I think a near-breakeven year in 2011 is possible, especially with oil prices where they are today. If anything, oil prices are going higher, irrespective of the turmoil in the Middle East. A growing economy is creating demand that simply outpaces supply. Keep in mind that Hercules was a $35 stock during peak oil in mid-2008. Of course, that was before the stuff hit the fan. Long-term we are heading back to peak oil prices. I can see Hercules doubling as a result. To see these stocks in action, check out the 5 Stocks Under $5 portfolio.
Twitter and become a fan on Facebook.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV