Under the Radar: Take Off to the Great White North
Been there, done that. The market could barely stifle a yawn at this week's 25 basis-point rate cut by the Federal Open Market Committee . But even in a slow, sleepy summer week like this one, a few nuggets of news and intelligence may have slipped under your radar, and they could make you money in the weeks and months ahead. Here's a look at what we found.
Anadarko Looking North?
Rumblings out of Calgary, Alberta, late in the week suggest Anadarko Petroleum (APC) may be looking to expand its Canadian presence. Sources north of the border say that the Houston-based exploration-and-production company is scouting out a possible deal with Anderson Exploration (AXN), a Calgary-based company with proven reserves of 664 million barrels of oil equivalent. Natural gas makes up 65% of its current production.
In recent presentations, Anadarko has hinted at its interest in getting larger and its attraction to Canada. According to one Canadian trader, Anderson is in Canada what Mitchell Energy (MND) is in the U.S.: a top-tier natural gas company with solid, proven reserves. "If Mitchell is one of the last jewels in the U.S., Anderson fits that bill in Canada," he says. What drew Devon (DVN) into
acquiring Mitchell is likely pushing Anadarko toward Anderson.
Recent market reaction hints that Anderson is in play, as the stock has moved higher on heavy volume since Wednesday. "Something is happening; there is a lot of conviction in the market about Anderson," says Scott Walters, a trader at Toronto-based Research Capital. "We're hearing Anderson will sell if they can get $35 [Canadian] or better." At current exchange rates, that equals about $22.70 a share. Anderson closed at $18.04 Thursday.
|Anderson in Play |
Rumors of a possible takeover might be fueling this stock.
O! (Air) CanadaSpeaking of the Great White North, anyone notice the nice run in Air Canada (AC:Toronto) in the past week? It's up nearly 12% this week -- that from an airline that's recently struggled to stay in the air.
|Air Canada Flies High |
But some question whether the ride can last
Delayed for TakeoffSpeaking of airlines, last week's column advised investors to take another look at AirTran (AAI) as it moved to the New York Stock Exchange. While the sector is turbulent, a few reliable sources suggested that AirTran -- known for its low fares and no-frills service -- was beginning to build loyalty at its Atlanta hub. Plus, its ability to maintain a profit in rough economic times was a good sign for the company's future. While that may be true, the company said late Wednesday that its third-quarter profits would range from 2 cents to 6 cents a share, well below the consensus estimate of 14 cents reported by Thomson Financial/First Call. The news sent the stock sliding more than 15% Thursday. Nevertheless, those AirTran bulls tried to find a silver lining. They reminded me that AirTran still expects to post a profit, unlike most major carriers. Still, I don't like such startling news to follow the rosy picture of just a week earlier. This one's coming off the radar, at least for now. Another piece of sort-of-good news is that UBS Warburg airline analyst Sam Buttrick upgraded the stock to hold from reduce (I assume that means sell) when it traded below $7. That leads to a very interesting question: How can you hold something that you supposedly already sold? Hmm, ponder that as you enjoy your weekend.
If you're looking for more on the energy markets, check in this weekend as we present the latest edition of the semiannual TSC Energy Roundtable. Six energy pundits work to make sense of the topsy-turvy oil, natural gas and power markets, including their best ideas to make you money in the months ahead.
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