ShareHub Hotlist 2019 Review – Week 03

A minor pullback for some stocks across the commodity sector despite commodity prices strengthening. The strong start to 2019 has not faltered (as yet) and the general rule is that if the first week in January is strong, then it normally sets out the stall for a positive year. That said, China/US trade talks need to deliver amicable results and the US Fed Reserve need to stick to one or two rate rises max. The usual media channels have quietened down since going all bearish during the Dec 18 rout. Some calm does seem to be returning to markets. M&A across the commodity sector has increased of late with some very large merger/buyout deals involving Newmont, Gold Corp, Randgold and Barrick Gold. Newmont may also be involved in an offer for SOLG (part of sharehub picks for 2019) as resources continue to build with successful exploration. BHP might also be in the mix for an offer which is why SOLG is one to watch in 2019. Across the Oil sector, Faroe follows Ithaca and becomes another stock that should have gone on to better things but was instead gobbled up by a predator. Talk of Chevron asset sales in the North Sea has put the brakes on PMO’s share price recovery. Investors are wary of another equity placing or rights issue. Premier Oil is unlikely to make a formal bid (if at all) until after Zama-2 drill news as it’s this kind of value added exploration which helps raise equity prices from which then capital raises become less dilutive or intensive.

Amerisur Resources continues to impress with the recent Indico-1 flow results. AMER assets are land based (onshore) and they have decent options when it comes to exports via OBA pipeline or via trucked routes. Margin levels are better than your usual offshore explorer/producer. And being debt free, the incoming cash from production continues to mount up. Fully funded for 2019 ops and non stop high impact drilling planned for all year makes AMER one of the most compelling buys around today. At 18.7p, the stock has all the catalysts required to multibag in 2019… providing the drill bit delivers success of course. M&A has been active in the Colombian region and AMER may have to watch out for unwanted approaches by Occidental should the exploration campaign in the Putumayo region, go well. ONGC might have something to say about that too which is why AMER might find itself in a takeover battle come end of 2019.

For time being, all eyes are on OPEC and non OPEC production cuts. News last week revealed that the Russian’s had only just begun to cut production and that it could take them longer to reduce than initially projected. Believe that or not, the Saudi’s will be keen to see all partners deliver upon pledges and thus far some are being slow to deliver. Oil traders (shorters) will be praying that OPEC and non OPEC (Russia) fall out or the deal becomes disrupted. Wishful thinking. Over the last 3 years, OPEC and Non OPEC (Russia) have coordinated better than many thought possible. If that continues, then PoO (Brent) should be $70pb+ in a few weeks time if not sooner.

Week 3 Positions below:

TheShareHub picks lead the way boosted by MATD, PDL and AMER. A decent Zama-2 result should see PMO contributing strongly to the folio. The Independent picks have had a strong week as the FTSE100 bounced on Brexit news as many took the view that an orderly exit now looks more likely than no exit at all. The Guardian picks performed well boosted by Morrison. The supermarket has been delivering higher quality goods at lower prices which is helping to attract new customers, most of which appear to be coming from Waitrose as the latter struggles to compete with the likes of Morrison but also the discounters like Aldi and Lidl.

ShareHub top picks 2019 – week 03
Independent top picks 2019 – week 03
Guardian top picks 2019 – week 03