The Best Energy Plays Right Now

By Scott Chan
Thursday, May 16, 2013

Few cyclical industries have undergone the degree of boom-bust cycles as much as energy. From the $12/barrel seen in the early 1990s, which effectively put countries like Saudi Arabia on a path towards national bankruptcy, to the peak-oil several years ago that put the price of a barrel of crude oil over $140, the energy industry is beset by consistently declining output at the world’s established mega-fields, ever-more-expensive new discoveries deep offshore, and an incredibly complex refining, transport and sales chain.

For Equity Investors, it’s Been a Fun Ride. But, These “Good” Times Cannot Last

Dr. Stephen Leeb
Wednesday, May 15, 2013
eurozone gdp commodities chart

Since the peak of the financial crisis in late 2008, the U.S. Federal Reserves has had the money printing presses working like never before. Through a series of asset-purchase programs, or quantitative easing (QE), the Fed has pumped trillions of dollars in to the economy in the last four-and-a-half years. The Fed’s balance sheet has ballooned to roughly $3.3 trillion – and further expanding with each passing week – from less than $1 trillion in the pre-crisis days. With little chance for fiscal help from Congress, the Fed has turned to QE repeatedly to stimulate the economy whenever the economic recovery has shown dangers of relapsing into recession. It’s currently buying Treasury and mortgage-backed securities at a breakneck annual pace in excess of $1 trillion.

A Small Drug Company Tackling Killer Bacteria

Dr Stephen Leeb
Monday, May 13, 2013
cubist pharmaceuticals

Antibiotic-resistant bacteria have become an alarming problem in hospitals. Hospital-based bacterial infections, in fact, now kill more people than diabetes. Worse, such infections are starting to appear outside of hospitals.
This makes it urgent to develop new antibiotics quickly. Most drug companies, though, aren’t interested, seeing the potential profits as limited. Today’s most profitable medications are those taken chronically, while antibiotics are short-term fixes that, moreover, are usually priced very modestly.

This leaves smaller companies leading the way—in particular, Cubist (CBST). Its major drug Cubicin treats skin, blood, and heart infections wholly or partly resistant to other antibiotics.

Cubicin sales, accounting for 80 percent of the company’s profits, have soared about sevenfold over the past six years, and we expect a few more years of rapid growth. But it’s still just one product with a limited life span. It was slated to face generic competition in 2020; to help shield its sales, Cubist entered into a profit-sharing agreement with generics leader Teva that will start in 2017 in exchange for a longer period of partial exclusivity.

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