2010 Trends to Watch - Research Notes

Here are some of my notes from a recent research session I did. My goal was to identify potential trends and tradeable stocks in 2010. Enjoy....

Energy
Natural Gas – nat gas is definitely part of the near-term solution as it is VERY abundant in the U.S.
Evidence of Adoption
Town and City Bus Fleets already in conversion process

Carbon Pricing – storing and capturing CO2 emissions.

Growing Population Growth
Demands on Food, Clean Energy and Clean Water


Stimulus Money – only one quarter (as of this writing) has been spent.

Power Grid
Quanta (PWR)


Security and Protection
Level 3

China
GSI – recently took a hit for issuing more shares. June $5 calls look good. Expects to earn 0.14 this year but S&P expects 0.90 in 2010.

LFT - #1 developer of banking software in China and #2 developer for insurance industry. Also just moved into the securities industry.

PWRD – I know the story here. Entertainment Software. Great margins and products.

Government Unwind – no one really wants to loan the U.S. gov’t money at 3.4% anymore, AND, the gov’t has been keeping rates artificially low to stimulate the housing market. This artificial stimulation should come to an end soon, thus rates should go up. Also, as demand picks up, inflation should rear its head and the gov’t will need to raise rates to combat it. TBT (ultra-short 20+ Treasury Bond) is an ETF that moves in the opposite direction of bonds by a factor of 2. So, if bond PRICES fall 1% as rates go up, then TBT should go up by 2%.

Switching From U.S. Consumer-Centric growth to multi-polar growth – Genius Mohmaed El-Erian says that this should happen over the next 5 years and things will be rocky over the transition period.
The average investor needs to look beyond the U.S. and be wary of inflation.

Gold – gold is doing what it’s doing because it’s bringing together people who are worried about all kinds of things: people worried about inflation, geopolitical risks, and the dollar.

Novartis – growing revenues at twice the clip as the industry and they just hired Jon Symonds who was at Astra-Zeneca and was very good at cutting costs. Novartis is bloated but growing revenues fast and just had 13 new drugs approved by the FDA over the last 3 years.

Ritholtz – Arch Coal; entire coal group. Gannett (GCI) and New York Times (NYT)

Big Companies with Strong Balance Sheets that have foreign sources of revenues – IBM