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How Investors Can Play Oil

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  • Description

    Powertrend brief editor Chris Versace gives tips for profiting on higher gas prices.

  • Duration 4:12
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-- in my next guest says it even went.

-- possible negative effect on the economy investors can still make money leaving us to say it -- front brief editor.

How to we do it how to play this -- While thanks -- me back Sherlund you know it's the old adage is true there's always a bull market out there somewhere.

We're talking about this case is seeing consumers likely coming under pressure with higher gas prices.

How do we play that we look for ways to remedy that pain.

Probably one of the quickest answer is is consumers gonna have to cut back their spending as their disposable income comes under pressure.

What does that mean probably not eating out as much not shopping as much of those sorts of things.

OK -- -- that -- that you're telling me like I'd like you're saying that I own stocks like casual dining -- -- -- supposed to sell it is that what you're saying.

What I would say is that the casual dining stocks Red Robin PF Chang's Cheesecake Factory and the like and how all had phenomenal run.

On the just reported some good numbers but let's remember those are backward looking.

The question is with gas prices rising what's the outlook for consumers continuing to be out in a robust fashion.

That's very questionable in my opinion.

Right now.

You know what we've seen thus far is.

Last -- gas was about 350 on average that shoot up about eight and a half percent of the median family income.

And we know that gas prices gonna go higher the question is where they average out is at four dollars for the quarter even higher so we're gonna see that in round yet crunch -- no doubt about it.

An answer that's gonna be rough for the consumer -- from an investor perspective one of the stocks that you had mentioned -- before you you mentioned the show up on the show before the stock at McCormick at -- -- -- -- Do you say that we basically got a look at like as a company like McCormick.

Get away and so we're gonna be saying hall government is saying woman couldn't look for names that are like home activities like spices and you still like the stock.

Oh absolutely still like it you know -- gonna have a great double digit earnings growth this year going into 2012 we just bumped up their dividend by 11%.

So all in the stocks worth 5758.

Bucks I'd like -- here right right around 5051.

I get more aggressive in the name around 48 dollars if we see a pull back a little bit.

Yeah banking and trading all of it flat it's been but that -- to try it right now today but it's been trading flat you're today so far.

We should -- viewers a couple more your pets -- wanna get through those because one of them.

Well they both actually are it's auto parts.

That's right isn't just your regular auto parts suppliers these -- auto parts suppliers that actually.

Our our supplying the hybrid market.

That's exactly right you know the backdrop here is that we're seeing a rebound in auto sales having JD power came out last night.

And -- that they're forecasting will be fourteen million units this year.

You know perspective 2009 we -- just over ten still way off where were 2007.

But were improving but here's the rub.

With the rising gas prices I think people are gonna start to say.

I can't pay as much as I can and not get as much IE driving distances and things like we're showing John.

-- controls and we just -- or is it Borg Warner I mean we're we're slowing what are your company's.

But they're both stocks though us in -- arguing actually pretty well your today they -- have double digit returns.

You still think that -- -- get into these stocks.

I do I do this is not -- short -- an issue with gas prices this is gonna play out not only this summer.

We're gas pricing -- be higher but as the global economy rebounds oil is gonna continue to loft -- in my opinion.

Okay -- quick.

Unemployment surely got doesn't -- that you've written extensively about this.

In your your investment briefed your clients.

Unemployment -- say that there's something we need to specifically look -- and unemployment data that we're not paying attention to Chris what is that.

Well -- there there's two parts one everybody's talked about the participation rate you know that not enough people -- in the domestic economy are actually in the workforce and I agree with that.

The other side though is.

Wage growth you know if we look at the CPI in January on a trailing twelve month basis CPI was up 2.3 percent wage growth.

By comparison was only -- one point 9% that's before we see this big moving gas prices so it's you know job growth is -- are but wages are not where they need to be.

OK and that's -- again back to you know ways to make money out of the transit we maintained 112 alright Chris -- -- -- -- -- -- -- Chris thank you.

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