Soaring Oil Greases Stocks' Skid
RIGHT NOW, IT'S ALL ABOUT THE OIL. The price of crude last week reached $38 a barrel, a level not seen since 1990. If you've bought any gasoline lately, you've been feeling the pain first hand -- and there's a good chance the price of petrol is headed even higher.
In April, Organization of Petroleum Exporting Countries is planning to cut its production by 4%. Meanwhile, the U.S. government last week said gasoline inventories stood 5% below the five-year average.
Nope, there was no one worried about deflation last week. Rather, the government reported a 0.6% rise in the producer-price index for January, reflecting a 14.1% increase in gasoline prices and a 16.8% gain in fuel-oil prices. Crude could he headed to $40 a barrel or higher. And how does $3-a-gallon gasoline sound?
The higher oil prices didn't do much to leaven the spirits of the equity markets, which were already on edge from the recent train bombings in Madrid. With the next round of quarterly-earnings reports still a few weeks away, traders turned their attention to weightier matters, like the hunting of Osama bin Laden's top deputy, Microsoft's troubles with European regulators, the jump in oil prices and, of course, their NCAA brackets.
Thursday, the market was temporarily buoyed by reports that indicated the Pakistani army had captured Osama consigliere Ayman al-Zawahiri. But as Friday came around, reports of his capture seemed premature, and were replaced by stories of heated combat between Pakistani soldiers and al Qaeda fighters. On the day's final session, the apparent lack of progress gradually wore on the market, despite rumors that bin Laden himself might be grabbed.
Other news added to the atmosphere: Friday morning, Washington, D.C., police were dispatched to the city's schools following a bomb threat, as President Bush gave a speech from the White House marking the first anniversary of the Iraq war. The New York Times, getting into the spirit of things, reported Friday that the U.S. government had resumed the study of nuclear fallout. You know, just in case.
The combination of higher oil prices and terror news provided a double whammy for those old whipping boys, the airline stocks, and less-than-good news for hotels and truckers. With oil flying, the Dow Jones Transports tumbled 2.7% for the week. Meanwhile, technology stocks moved into full scale retreat: the SOX, the widely tracked semiconductor index, closed the week at its lowest level since October, including a 3.6% slide on Friday alone. The week closed out on a particularly ugly note, as a lack of resolution in Pakistan combined with a "quadruple-witching" options expiration to trigger a bout of late-day selling. The Dow Jones Industrial Average followed up the 3.35% decline of the previous week with a loss of 53 points, or 0.5%, to 10186.60, including a 109-point tumble Friday. The Nasdaq Composite took a harder hit, sliding 44 points for the week, or 2.2%, to 1940.47, boosting its loss for the year to 3.1%; the Standard & Poor's 500 slumped 10.83, or 1%, to 1109.74.
If last week's stock performance doesn't convince you, there are plenty of reasons to be worried about higher oil prices. Mark Zandi, chief economist at Economy.com, figures that every penny increase in the price of a gallon of regular gasoline costs U.S. consumers about $1 billion a year. So far this year, he says, prices are up about 30 cents a gallon -- that's a $30 billion hit to consumer pocketbooks. As Zandi points out, that roughly offsets the impact of the Bush Administration tax cuts. If oil stays at current levels through 2004, he says, it would take a chomp out of the recovery -- figure 3.75% gross-domestic-product growth, rather than 4.5%.
Paul Kasriel, an economist at Northern Trust, advises against looking at oil in isolation. "Why the interest in just oil prices?" he responded in an e-mail to a query on the price rise. "What about corn and copper prices? They, too, are hitting multi-year highs. The fact that almost all commodity prices are rising in unison suggests that there is a rise in global aggregate demand." In part, he notes, this stems from the boom in China, which in turn has triggered an economic recovery in the rest of Asia.
Another ongoing factor is the weak dollar -- as both Zandi and Kasriel point out, OPEC is keeping the lid on the supply of crude in an effort to boost prices to keep revenues steady in the face of the weak greenback. Tom Petrie, who tracks the oil patch from Petrie Parkman in Denver, sees some additional forces at work. One shift over the last year, he says, has been a change in the dynamic between Russia and OPEC, from competition to co-operation. Petrie also points to the emergence of concerns about the peaking of Saudi Arabian oil production. Petrie says he believes there is reason to believe "the maturity of the Saudi resource base is more advanced than is generally believed, a change in the mindset where you start to come to grips with the fact that the main wealth of Saudi Arabia is finite, not infinite."
Petrie notes that the price of crude in the 1995 to 2000 period centered around $20 a barrel, then moved into the high 20s on average in the 2000 to 2004 period. Last year, prices averaged $31 a barrel; the average this year is about $35. Petrie thinks we're moving now into a stretch when "80% of the time, oil will be in a range of $27 to $39 a barrel." While that suggests we're now at the top of the range, Petrie nonetheless says we could see a spike to higher levels this summer as we hit the peak driving season in the U.S. By mid-summer, he says, higher-priced markets like California could see gasoline touch $3 a gallon.
So what's the upshot for oil stocks? "The market has not fully discounted those prices," Petrie says. "We're looking at pretty rewarding oil prices for the balance of the decade." Petrie believes we could see the energy component of the S&P 500 gradually move up from about 6% of the index to "a meaningful double-digit component." Among his firm's current picks: Murphy Oil, Devon Energy and Tom Brown.
PETRIE FINDS A SYMPATHETIC EAR IN KEN Heebner, the quirky head of the Boston-based CGM mutual funds. Heebner -- who months ago began loading up on metals plays like Inco, Phelps Dodge and USX, in anticipation of a spike in commodities prices driven by the booming economy in China -- has lately been shifting some of his bets from metals to oils.
Heebner, in fact, thinks oil might be the great undiscovered China play. "If you suggest that we might have $40-to-$50 a barrel oil, people look at you like you have a problem," he says. But Heebner contends that the widespread belief that oil will trend back to $25 a barrel will prove to be misguided -- and he says $40 oil would mean riches for investors in oil stocks. "I like the risk/reward," he says. "Visibility is low. You need to assume that Asian demand grows much faster than most people think." Among his favorites: Amerada Hess and Brazil's Petrobras.
When I interviewed Heebner two years ago (Fund of Information, Feb. 4, 2002), he'd plunged headlong into homebuilding stocks. His basic theory was that the industry was consolidating, supply of new homes was tight and that earnings multiples in the group were ridiculously low. Since that time, the stocks have skyrocketed, trouncing the S&P 500, as low interest rates lifted housing demand. As the stocks have ascended, the group has become a favorite target of short-sellers, who expect the good times to grind to a halt once the Federal Reserve reverses course on interest rates and begins to tighten.
But Heebner still believes. His CGM Realty Fund, which has 80% of its assets in the home-building group, is among the year's best-performing funds, up 10.6% for the year through Thursday, after a nearly 90% gain in 2003. Skepticism on the group remains high, he says, despite sharp earnings gains. The 10 largest homebuilders, he says, are all growing earnings 20% to 50% a year -- and none trades for more than 10 times earnings.
He says the stocks are held back by a combination of huge investor skepticism about the sustainability of earnings growth, which for many of the companies is at least partially driven by acquisitions, and the lack of interest in the stocks by large-cap growth fund managers, for whom they tend to be too small. But Heebner maintains that "it's hard to find a risk-reward as favorable anywhere else."
That said, Heebner has begun plotting an exit strategy. "A pattern of Fed tightening will make investors worry about higher rates," he says. "Six months from now, am I going to be cutting back? I might." But not yet.
ROB CIHRA, AN ANALYST WITH FULCRUM Global Partners, observes that if you had a nickel for every time Sony has been rumored to be considering a bid for Apple Computer, you could buy Apple yourself. Nonetheless, that old chestnut has contributed to a sudden rush of enthusiasm for Apple shares. While the tech sector as a whole has lost a little ground since the end of 2003, Apple shares have gained about 20% this year.
Cihra doubts there's anything to the rumor -- he figures it's a chicken-and-egg thing, popping up whenever Apple's shares surge. A more likely explanation is enthusiasm about the hugely successful iPod music player. Cihra notes that the spiffy new mini iPods are so popular that they're almost impossible to find in retail stores at the moment.
Clearly, Steve Jobs has a real hit on his hand with the iPod, and he's also got the leading downloadable music site with iTunes. The question is how much music matters to Apple overall. In the December quarter, Cihra notes, the iPod accounted for 13% of Apple's revenue. Cihra expects the iPod to be about 11% of total Apple revenues for the September 2004 fiscal year, up from 6% in fiscal 2003. As for iTunes, Cihra agrees that it's been a big success, but notes it isn't a profit generator, but rather a driver of iPod sales.
Cihra thinks Apple investors may be set up for disappointment. He notes that in 2003, Apple showed steadily improving year-over-year revenue growth: negative 1% in the March quarter, up 8% in the June quarter, then up 19% in the September quarter and a gaudy 36% rise in the December quarter. But Cihra says the trend has peaked: he sees 23% growth in the March 2004 quarter, eventually leveling off over the next few quarters at around 10%.
Ugly Bookends: The Dow saw a midweek rally, spurred by a marginally more friendly Fed policy announcement, wiped out by nasty declines at the beginning and end of the week.
"I worry that the core Mac business is really not all that stellar," Cihra says. In fiscal 2003, he notes, Macintosh unit sales shrank 3%, while overall PC-industry sales grew in the low double-digits. For this year, Cihra says he's modeling for high-single-digit Mac unit-sales growth, lagging an expected 14% growth in the overall PC market.
Andy Neff, PC analyst at Bear Stearns, says he has questions about the wisdom of Apple's retail-store strategy, which now includes about 75 locations. He notes that Apple's U.S. PC market share since opening the first store has actually dropped to about 2% to 3% from 4%. The way he sees it, Apple has transferred sales to a higher-cost sales channel, while doing nothing to stem the erosion of market share in the education market to Dell.
So what's Apple worth? Cihra notes that Apple has about $12 a share in cash. Back that out, and you get roughly $14 a share for the operating company. Cihra projects earnings of 48 cents a share in fiscal 2004, and 60 cents in fiscal 2005, but notes that about 10 cents of that in each year is from interest income. Drop that out, and you get 38 cents a share from operations for fiscal 2004. On that basis, the market is valuing Apple at about 37 times earnings from operations. Too high, says Cihra.
Neff thinks you can slice Apple into three parts: the cash, the computer business, and the iPod and yet-to-be-announced follow-up consumer products. Add them up, Neff says, and you get an intrinsic value of $19 to $22 share -- and that's after placing a high multiple on the iPod business of 40-to-50 times earnings to reflect follow on consumer products. As his calculation suggests, he wouldn't be buying the stock here, either.
well, it was quite a week for Bank of America. First B of A and its merger partner Fleet Financial agreed to pay out $675 million in fines and fee reductions to settle charges related to the mutual-fund trading scandal. Bank of America's name came up early in the investigation; Fleet's popped up more recently. (Especially charming was the discovery of improper trading in Fleet's Columbia Young Investor Fund, a portfolio designed for children.)
Bank of America last week also wrapped up its deal with Fleet, solidifying its position as the bank with more U.S. retail deposit assets than any other in the country. The Wall Street Journal reported last week that synergies in the deal would result in the slicing of 13,000 jobs.
Nonetheless, the Street has some doubts that the company can realize all the expected synergies. John McDonald, a banking analyst at UBS, notes that when the deal was first announced last year, the bank forecast earnings of $7.10 a share in 2004, and $7.97 a share in 2005. In January, the bank said it could top its original 2004 projection.
"The valuation of the stock says investors don't think they can get there," McDonald says. At about 80 a share, B of A is trading at 11.1 times estimated 2004 earnings, and 10.2 times the company's 2005 forecast. McDonald notes that an index of large-cap regional banks that he tracks trades for about 13.9 times projected 2004 earnings, and 12.4 times expected 2005 results -- in other words, B of A trades at a 20% discount to its peers.
McDonald thinks the doubters will be proven wrong: He has a one-year target of 96, which assumes the price/earnings ratio on 2005 results gets to about 12. The stock, he says, is clearly worth more than a 10 multiple. And he notes that while you wait for the synergies of the Fleet deal to prove out, you can be comforted with a dividend yield of just over 4%, more than you get on 10-year Treasury notes.
油价飙升加速股市下挫
眼下，石油成为市场的焦点。上周原油价格攀升至每桶38美元，为1990年以来的首次。如果你最近购买过汽油，那你一定会首当其冲地感受到切肤之痛──而且，今后石油价格很可能进一步走高。
今年4月，石油输出国组织（Organization of Petroleum Exporting Countries, 简称欧佩克）将减产4%。与此同时，美国政府上周表示，汽油库存比5年均值低5%。没有人再担心通货紧缩的问题。政府的数据显示，1月份生产商价格指数上涨0.6%，受到汽油价格上涨14.1%、燃油价格上涨16.8%的拉动。原油价格可能会进一步上涨至每桶40美元甚至更高水平，而每加仑3美元的汽油价格恐怕也不是天方夜谭了。
最近马德里发生的列车爆炸事件已经使市场颇感紧张，油价走高对股市人气的影响并不太大。由于下一轮季度业绩报告季节还要等到几周之后，交易员们将目光转向更重大的事件，如对乌萨马?本?拉登(Osama bin Laden)头号副手的搜捕、微软(Microsoft)遭遇欧洲监管当局方面的麻烦以及油价的上涨等，当然，还有美国NCAA大学生篮球赛。
上周四，市场一度受到有关巴基斯坦军队围困拉登"基地"组织二号人物扎瓦希里(Ayman al-Zawahiri)的报导提振。但是，次日看来，这则报导似乎是有些过于乐观，而巴基斯坦军队和"基地"组织分子激战升级的报导取代其成为新的焦点。临近股市收盘时，势态进展的匮乏逐渐打击市场，尽管有传言称拉登本人可能已经被俘。其他消息进一步加重了市场的低迷人气：周五早间，当美国总统布什(Bush)从白宫发表纪念伊拉克战争一周年演说之际，哥伦比亚特区的学校因遭遇炸弹威胁而受到警方调查。《纽约时报》(The New York Times)当日报导说，美国政府已经恢复了核战略的研究。
飙升的油价及恐怖活动的消息对那些原本受挫的航空类股无异于雪上加霜，而酒店和卡车运输类股也遭受打击。由于油价上涨，道琼斯运输分类指数上周下挫2.7%。同时，科技股全线回落：费城证交所半导体分类指数上周收于去年10月以来的最低水平，其中单是周五跌幅就达到3.6%。
上周五，由于巴基斯坦的消息尚无进展，而且适逢四巫聚首日，股市尾盘涌现一轮抛售热潮。道琼斯工业股票平均价格指数在前一周下跌3.35%之后，进一步下跌53点至10186.60点，跌幅0.5%，其中周五单日下挫109点。那斯达克综合指数受挫较重，当周下跌44点，至1940.47点，跌幅2.2%，使今年截至目前的跌幅达到3.1%；标准普尔500指数下跌10.83点，至1109.74点，跌幅1%。
如果上周股市的表现还不能引起你的关注，那么还有大量的理由让你对不断上升的油价感到担忧。Economy.com首席经济学家马克?赞迪(Mark Zandi)估算，每加仑普通汽油的价格上升一美分，美国消费者每年就要多支出10亿美元。他说，今年迄今为止，汽油价格上涨约30美分，也就是说消费者为之付出了300亿美元。赞迪指出，这几乎抵消了布什政府减税措施所带来的影响。他说，如果油价在2004年仍维持在当前水平，经济复苏进程将会放缓，国内生产总值将增长3.75%，而不是预期中的4.5%。
Northern Trust的经济学家鲍尔?卡斯瑞尔(Paul Kasriel)建议不要孤立地看待油价问题。他说，粮食和铜的价格也触及多年高点，几乎所有商品价格一致上涨的事实表明，全球总需求正在增长。他说，其部分原因在于中国经济欣欣向荣，进而带动了亚洲其他地区的经济复苏。
另外一个持续影响市场的因素是低迷的美元汇率。赞迪和卡斯瑞尔均指出，欧佩克将限制原油供应以提升市场价格，从而在美元走软的情况下保持收入的稳定。Petrie Parkman驻丹佛的石油分析师汤姆?柏特里(Tom Petrie)认为，还有其他一些因素在起作用，如去年俄罗斯和欧佩克的关系由竞争转为合作。柏特里还表示，人们开始担心沙特阿拉伯的石油产量已经达到顶峰。他认为，有理由相信沙特资源枯竭的速度要快于人们普遍的预期。该国的石油资源是有限的，而不是无穷尽的。
柏特里称，1995-2000年间原油价格平均在每桶20美元左右，2000-2004年则上涨至25美元以上的水平。去年，油价平均为每桶31美元；今年的均价在35美元左右。柏特里 认为，油价正在逼近这样一个时期：在80%的时间内，油价将位于27至39美元的区间。虽然这意味著当前油价处于这一区间的高端，但他表示，随著夏季美国驾车高峰期的来临，油价可能上涨至更高水平，加州的汽油也许会达到每加仑3美元。
那么，石油类股会怎样呢？柏特里称，股市尚未充分体现油价的影响，到2010年之前油价将会给石油类股带来丰厚回报。他认为，能源类股在标准普尔500指数中的比重将由6%逐渐升至两位数的水平。他所在的公司目前推荐Murphy Oil、Devon Energy和Tom Brown。
柏特里的看法得到波士顿CGM共同基金的负责人海伯纳(ken Heebner)的认同。几个月前，海伯纳开始买进Inco、Phelps Dodge和USX等金属类股，因预计中国的经济繁荣将推动商品价格走高。最近，他又将部分持股由金属类股转到石油类股。
实际上，海伯纳认为，石油类股可能是尚未为人所知的受益于中国需求的类股。他说，"如果你预测油价可能达到每桶40至50美元，大家肯定觉得你有毛病。"但海伯纳表示，油价将回落至25美元的观点将被证明是错误的。他说："一旦油价升至40美元，将给石油类股投资者带来可观回报。高风险高回报，将来的油价走势很难预料，你要知道亚洲的需求增长速度远远超过多数人的预期。"他所青睐的股票包括Amerada Hess和巴西Petrobras。
两年前我采访海伯纳的时候，他手中持有大量房屋建筑类股。他当时的基本观点是，房屋建筑行业正在整合，新屋紧俏，该类股的本益比低到不可思议的水平。从那以后，受低利率的提振，房屋需求激增，房屋建筑类股大幅飙升，表现甚至好于标准普尔500指数。但随著股价的上涨，这类股票也变成了卖空者看好的目标。他们认为一旦美国联邦储备委员会(Federal Reserve, 简称Fed)加息，卖空房屋建筑类股就会获利。
但现在海伯纳仍然坚持两年前的看法。他管理的CGM Realty基金收益表现非常出色，对房屋建筑类股的持股比例就高达80%。今年截至上周四为止，该基金涨幅为10.6%，2003年涨幅竟高达90%。他说，尽管房屋建筑企业的利润大幅增长，但对行业前景感到怀疑的大有人在。据海伯纳估算，前十大房屋建筑企业的年利润增幅达到20%-50%，但没有一只股票的本益比超过10倍。他认为，房屋建筑类股涨势受限主要有两大原因。其一，投资者对房屋建筑企业能否保住持续的利润增长势头非常怀疑，因为许多公司实现利润增长的部分原因是进行收购。其次，大型增长型基金的经理对房屋建筑类股不感兴趣，对他们来说，这类股票的市值太小了。但海伯纳坚持认为，很难找到风险回报率如此高的股票了。 也就是说，海伯纳已经开始制定一项退出战略了。他说，Fed加息会让投资者感到担忧。从现在开始6个月内，他可能会减持房屋建筑类股。但现在还不是时候。
Fulcrum Global Partners的分析师希拉(Rob Cihra)说，每次有传言称索尼(Sony)考虑收购苹果电脑(Apple Computer)时你都买一点苹果股票，你现在已经富得流油了，几乎可以买下整个苹果电脑了。不管怎么说，这种老套的手法还是推动苹果电脑股价激增。虽说从2003年年底开始，科技类股整体略有回落，但苹果电脑却飙升了大约20%。
可是希拉觉得，收购传言的作用并不大。就像是先有鸡还是先有蛋一样，实在难以说清是传言导致股价上涨，还是股价飙升引发了收购传言。更合理的理由应该是iPod音乐播放器大获成功，引发了投资者对苹果电脑股票的极大热情。希拉指出，漂亮的新兴迷你iPods太受欢迎了，在零售店里一抢而空。
很明显，乔布斯(Steve Jobs)的iPod大获成功，他的iTunes也成为领先的音乐下载网站。现在的问题是，音乐在苹果电脑的整体业务中到底能占多大份量。希拉指出，12月当季iPod收入占苹果电脑收入总额的13%；他预计iPod在苹果电脑截至9月份2004财政年度总收入中所占比例约为11%，高于2003财政年度的6%。至于iTunes，希拉承认这也是一项大获成功的产品，但并不是苹果电脑的利润增长点，把它看作是iPod销售增长的推动因素也许更合适。
希拉认为，苹果电脑的投资者们可能要感到失望了。他说，苹果电脑2003年每季度收入较上年同期的增幅都在稳步上涨，3月份当季收入减少1%，6月份当季增长8%，9月份当季增长19%，到了12月当季，收入增幅已高达36%。但希拉说，至此收入增长的势头已经达到顶峰。他预计2004年3月份当季收入增幅回落到23%，未来几个季度将维持下降趋势，最终跌至10%左右。
他担心的是，苹果电脑Mac核心业务的实际表现不够强劲。他指出，2003财政年度Macintosh子公司销售额减少了3%，而同期个人电脑全行业销售额增幅处于1%-4%之间。根据希拉的模型，今年苹果电脑Mac子公司销售额增幅将在7%-9%之间，远低于他对个人电脑市场的整体收入增幅预期14%。
贝尔斯登(Bear Stearns)个人电脑行业分析师奈夫(Andy Neff)对苹果电脑的零售店策略感到怀疑。苹果电脑现有大于75家零售店铺。奈夫说，从苹果电脑第一家零售店开张以来，公司在美国个人电脑市场的占有率却从4%降到了2%-3%。据奈夫分析，原因是苹果电脑将销售业务转到成本更高的零售渠道来进行，而对戴尔电脑(Dell)在教育市场抢占苹果电脑占有率的势头没有采取任何对策。
那么，苹果电脑到底价值几何呢？希拉推算苹果电脑每股现金价值12美元，此外每股营运价格约为14美元。他预计2004财政年度苹果电脑每股收益48美分，2005财政年度每股收益60美分，但每一年利息所得都达到每股10美分。如此算来，苹果电脑2004财政年度每股营运收益38美分，而当前的股价相当于37倍的本益比。在希拉看来，这未免太高了。
奈夫的方法是，将苹果电脑一切为三：现金、电脑业务和iPod等消费品。三者相加，苹果电脑每股内在价值约为19-22美元。但前提是预计iPod以及后续电子消费品业务的价值高达这部分业务利润的40-50倍。由此看来，Neff也不会在当前价位买入该股了。
好了，这一周看起来可以说是"美国银行(Bank of America)之周"。首先，美国银行和即将与之合并的Fleet Financial同意支付罚款并减少收费，总计6.75亿美元，就共同基金交易丑闻有关的事件与监管机构达成和解。调查过程中，美国银行的名字首先浮出水面，而Fleet则到最近才露面。尤其引人注意的是，Fleet旗下Columbia Young Investor基金被发现有违规行为，这是一只专为儿童设计的基金。
上周美国银行与Fleet的并购交易取得重大进展。《华尔街日报》(The Wall Street Journal)上周报导，合并增效将导致双方共裁员13,000人。
无论如何，华尔街人士对美国银行和Fleet能否实现预期的增效感到怀疑。瑞银(UBS)的银行业分析师麦克多诺(John McDonald)认为，去年宣布这项交易的时候，美国银行就预计2004财政年度每股收益可达7.10美元，2005年增至7.97美元。今年1月份美国银行还表示2004财政年度业绩将超过最初的预期。
麦克多诺说，从股价表现来看，投资者对美国银行能否实现预期收益感到怀疑。目前80美元左右的股价只相当于2004财政年度预期收益的11.1倍，2005财政年度预期收益的10.2倍。而他追踪的大型地区性银行的股价通常是其2004财政年度预期收益13.9倍，2005财政年度预期收益的12.4倍。换句话说，美国银行目前的股价较其同行低20%。
麦克多诺认为，这些心怀疑虑的投资者最终会发现他们想错了。他对美国银行股票的1年期目标价位是96美元，约为2005财政年度预期收益的12倍。他说，该股本益比明显应该高于10倍。他预计，随著合并的增效效应逐步显现，该股的派息增幅将略高于4%，比10年期美国国债好一些。
