This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Investing Ideas As Commodities Tumble

Chris Lau, Kapitall: A good time to look for value is when the markets are bouncing back from monthly lows but a sector is not participating in it. Such is the case for companies operating in the commodities market. The drop is not going unnoticed by analysts. Take Joy Global (JOY) as an example. The company was downgraded by Goldman Sachs. The investment firm turned negative on the company, citing weaker demand and lower equipment sales from shrinking mining equipment demand.

Is there an opportunity to invest in resource companies? Four stocks come to mind.

Japan and China lead resource stocks

From a macroeconomic level, gold prices are being hurt by Japan’s ongoing efforts to implement quantitative easing. Earlier this year, investors took a bullish position in the Nikkei index, while short selling the yen. The reversal of this position is now underway. Investors are all trying to unwind their long position in the Nikkei, while covering their short position in the Yen.

In China, slower growth is not helping commodities prices either. Raymond James recently downgraded Teck Resources (TCK). The firm expects lower growth in China and slower global growth to hurt coal prices, giving them limited room to rise.

BHP Billiton (BHP) is cutting its capital expenditure to $15 billion annually for the next few years. The previous rate was supposed to be $22 billion in 2013. In 2014, the firm had expected to spend $18 billion. The sharp reduction in capital expenditure (capex) was done because BHP expects slow growth in China in the years ahead.

Upside from Dr. Copper

The negative trend in shares of Freeport McMoRan (FCX) continued, even though the firm recently closed its acquisition of Plains Exploration. Insider buying could support a bullish case for the company. James Flores, the Vice Chairman, bought more than 1 million shares. The company is also paying a special dividend of $1 for shareholders of record as of June 14, 2013. In the short term, shares could dip when the company trades ex-dividend.

Energy sector

In the energy sector, investors might want to look at BP, Inc. (BP), whose share pay a dividend of over 5%. Shares continue to be held back as the company pays $8 billion to victims of the Gulf of Mexico spill.

BP allocated nearly $3 billion for an oilfield in Iraq. At least 300 oil wells will be drilled over the next 5 years.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs