"Street Critique"-Hilary Kramer, Market Strategist & Author of "Ahead of the Curve"
Wednesday, February 20, 2008PAUL KANGAS: Tonight's "Street Critique" guest says there are two ways to play $100-a-barrel oil. She's Hilary Kramer, market strategist and author of "Ahead of the Curve." Hilary, welcome back to NIGHTLY BUSINESS REPORT.
HILARY KRAMER, AUTHOR, "AHEAD OF THE CURVE": Thank you, Paul.
KANGAS: Well, we have over $100 a barrel oil. We've got a consumer price index reading showing inflationary pressures up across the board and the Fed is lowering its growth forecast for the year. What do you make of all of this?
KRAMER: Well, it's really what the stock market makes of it. And obviously every one was confused with what the Fed was trying to tell us. But basically with oil up so high, we know that somewhere in this world there is no recession, there's high demand. And with the stock market recovering today, after the editorial came out, it also tells us that the stock market's pricing in a recovery six to nine months from now.
KANGAS: Let's get back to those sky-high oil prices. You say there are a couple of ways to survive oil at these levels. Expand on that, if you would.
KRAMER: Well, the best way is right, the trend is your friend. So you want to buy the oil companies. And you want to buy the ones that are going to make the most money. I like Petroleo Brasileiro. The ticker symbol is PBR and it's known as Petrobras. Now this is a Brazilian oil company. They have made reserve finding which is supposedly one of the most important in the last 50 years if not the most important and Brazil may join OPEC. So PBR, it is a stock that I don't own yet but I'm going to put in my portfolio at some point soon. And I think we're going to see PBR be a formidable challenge to other big oils.
KANGAS: When oil prices shoot sky-high, there is always a lot of talk about alternative energy. What are you seeing there?
KRAMER: OK First Solar, FSLR is the ticker symbol, this is thin film technology. And First Solar is a company that we've seen a lot of volatility in it. But it's starting to come back. Their costs are going down. They made an announcement today. And also, Congress may extend the tax credits that are expiring at the end of the year now that there is so much pressure on the price of oil.
KANGAS: Well, you've recommended solar before. And we should warn our viewers it has very wide price swings. So it is not for the faint of heart, correct?
KRAMER: That's right. You want to be very careful, very careful with these companies.
KANGAS: Do you have a final selection?
KRAMER: Yes. OESX, the company name is Orion Energy. This is a new IPO. I love this company. This is the sale of the day, Paul. At $8 and change this is a company that is in energy efficiency management. Big companies with warehouses use OESX to upgrade their lighting so it costs a lot less.
KANGAS: OK. And in the few minutes we have left, less than a minute, are there any sectors you would avoid with oil at these levels?
KRAMER: Yes, airlines. Be very careful of airlines and be very careful of big retail companies like Macy's that have hundreds of thousands of square feet that they have to heat and put air conditioning in.
KANGAS: Good advice. Hilary, do you own any of the issues you have mentioned or have any other disclosures to make?
KRAMER: I own all of them except for Petrobras, PBR.
KANGAS: OK. I want to thank you once again for being with us. See you soon again.
KRAMER: Thank you, Paul.
KANGAS: My guest, market strategist Hilary Kramer.
