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Napanee, Ontario | Many commodity names have been totally taken behind the woodshed.
If you believe they will continue to pull out the stops to keep the financial system intact -read, extended central banking measures, prolonged lower rates, the "QE put" for a floor....
...then i would say starting a position in some of the strong commodity names will pay good returns. the oversupply will be adjusted as the smaller, higher lost more leveraged enterprises start getting shuttered as the hedges roll off for many in the latter part of this year and into early 2016.
The market is pricing those realities into these names presently - many stocks trading at under 5, 4 and 3x EBITDA to enterprise value, and pennies on the dollar in book value. Granted the profits and lack thereof are horrible right now in this industry, but the entire commodity complex is not going to grind to a halt. The companies that make it through are going to bring some handsome returns.
Of course, if the markets are allowed to crash - as in the removal of QE and other central banking "props", then All bets are off as i believe that the entire financial system would be in jeopardy. | |
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Shanghai
