Mike Larson runs an investment advisory called Energy Stock Alert for Weiss Research, and he’s lately been swamping our email box with promises that his “Major energy recos” are imminent — with the promise that he’s looking for stocks with large yields that also have the potential to double or more in value.
So that sounds lovely, right? It is, at least, a respite from the waves of pundits predicting economic collapse, and I don’t think I’ve written about this particular letter before — so I thought we’d take a look.
(As an aside… do you want to sound smart? Want to build up a newsletter service? Step one: Predict that something terrible is about to happen “in the next couple years.” Doesn’t matter if you’re right or not, or if you miss out on great market gains while you wait for the next bear market (or worse) to come, but people perceive it as prescient and wise and “contrarian” because we’re hard-wired to fear risk, particularly so if we happen to be retirees or near-retirees with a strong memory of the 2001 and 2008 crashes).
The last time I wrote about a piece from Larson was when he was teasing an “almost perfect” stock for his Safe Money Report (which also often warns of crisis), that was in a Friday File piece for the Irregulars back in May that I’ve just opened up for anyone else to read if you’re interested — it was, like today’s piece, a teaser about a high yield stock, though I also went off on a bit of a rant about fearmongering and diversification.
The stock he teased then, Ferrellgas, has a yield just under 8% now and has done OK since May — so what’s he teasing now that has a higher payout? Here’s how he gets us excited:
“This little-known stock pays you an 8.5% dividend yield AND ALSO gives you the potential to more than DOUBLE your money….
“Do you know who’s earning some of the greatest profits in this domestic energy boom?
“Answer: The companies that are getting rich TRANSPORTING all of this new energy to market!
“Think of it: What good is a barrel of oil or a cubic foot of natural gas at the wellhead? It can’t fuel your car. It can’t heat your home. It can’t help to power factories or grease the wheels of commerce.
“It can only do all of that once it’s brought to market through the shipping and refining process.
“And the business of getting oil and gas from Point A to Point B isn’t just huge here in America — it’s global!”
So… another transport company (Ferrellgas was sort of a midstream/transport company too — mostly in propane). More details?
“This company owns and charters a fleet of 70 large ships and other vessels. Those include 24 container vessels, 19 large crude oil tankers, 14 drybulk ships, six offshore supply vessels, and assorted other oil drilling rigs and ships.
“It generates cash flow from the chartering of those vessels to an assortment of oil drillers, shipping firms, and other customers — and pays out handsome dividends with the proceeds. Its current dividend rate is 41 cents per quarter, good for a yield of around 8.5% at recent prices.
“Plus, net income is exploding: In the first quarter, the company reported net income of $40.7 million, or 44 cents per share, up from $18 million, or 20 cents per share, in the December quarter.
“At that rate of growth, investors will be lining up to buy this stock — and to give you the opportunity to multiply your money many times over!”
That’s probably enough to feed the Thinkolator, and I suspect I’ve owned this company in the past, but let’s get a few more clues just to be certain:
“The firm recently delivered a large drilling rig under a new charter agreement, acquired nine container vessels and two dry bulk ships, and took other financing steps to help support ongoing growth. It now has a long-term charter backlog of around $5.1 billion, with an average remaining term of 5.7 years.”
And Larson apparently does not think of this as a “set and forget” investment — though frankly, most investment newsletters don’t do “set it and forget it” anyway … many folks won’t keep renewing a subscription, particularly an expensive one, just to hear “sit tight” every month… here’s what he says:
“I expect this stock to be so volatile right now, I can NOT, in all good conscience, recommend it in a monthly publication.
I must recommend it to members of my Energy Stock Alert service where I can follow it for you daily if need be.”
“Follow it for you daily,” by the way, runs at a $597 annual “list price” for the subscription (“on sale” for $297, naturally), Larson’s monthly newsletter, Safe Money Report, is more like $100 a year.
So what’s this volatile high-yielder? Thinkolator sez he’s recommending: Ship Finance Limited (SFL), a company created by billionaire v