HIT ME WITH A HAMMER: Is it time to buy BP common stock?

The water is murky in the Gulf of Mexico...and the bong water at the White House is seemingly murkier...so I am wondering if now is the time to open a position in British Petroleum, Plc's common stock (NYSE ticker: BP).

Nathan Rothschild is reputed to have said that "the time to buy is when the blood is running in the street". The value of British Petroleum's common stock has fallen about 70% since the explosion, fire and subsequent loss at sea of the Deepwater Horizon which left 11 able, good crew dead and an environmental mess which continues to unfold. The question at hand seems to be "is a 70% discount blood in the streets?"

British Petroleum's stock is at a 13 year low today. So is a 13 year low "blood in the street" or one of those dude-in-the-street-with-a-sandwich-board-dat-sez-"everything must go 70% off"-that said "50% off" last week-and will say "85% off" next week-kinda deals? That is a question I cannot rightly answer but I do suspect that BP has a buyable look about it. A 70% near term discount strikes me as a "decision height" opportunity...i.e. the bottom may be near so "you gonna'pull that pistol or whistle Dixie".



I thought for a moment about giving a detailed, erudite, logical and persuasive argument to buy British Petroleum's common stock but in this case I am going to spend my time opening a position and preparing to buy more on any serious dips. The time for shooting appears to be close at hand and if it ain't there is plenty of room to shoot more later.

CAVEAT: I do not believe in unconventional offshore petroleum and have bet predominantly on unconventional onshore natural gas.

However, years ago I took long positions in Keppel Engineering and Sembcorp Marine.

Not a fan of the deep water but at one point in the past was aware of the permitting situation.

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INKLING OF AN INVESTMENT IDEA: Hedging for Solar Weather ?

The headline over at NASA reads "As The Sun Awakens, NASA Keeps A Wary Eye On Space Weather". The issue at hand is a predicted increase in the frequency and intensity of what are informally known as "Solar storms" that arise from the Heliophysic event called a solar flare.

Space weather has historically had various effects. Solar wind is responsible for the Aurora Borealis and Aurora Australis. Solar flares can range from mild to wildly spectacular such as the Carrington-Hodgson Flare during the late Summer of 1859. The 1859 event caused problems with the global telegraphy net, a certain amount of panic, etc. More recently (and more important to the issue at hand) is that a solar flare is the suspected culprit in the case of the demise of the Galaxy 15 spacecraft.

The fate of the Galaxy 15 highlights modern civilization's growing vulnerability to space weather events. People everywhere are using electronic devices and various sorts of personal communication equipment in just about every conceivable application. To make matters worse, the electrical grid in the United States is already in need of overhaul and upgrade as well as the fact that many of the spacecraft that handle modern communications are nearing the end of their service lives.

With the vulnerability to space weather clear and immediate, the question is who fixes things that get broken in the storms?

Satellites are not likely to get repaired in space as many of the big communications units are way out in Geosynchronous Orbit. If such hardware gets fried, replacement is the likely scenario. The Boeing Company and Lockheed-Martin have built a number of spacecraft and do come to mind but such activity is a small portion of their portfolios and I am not to hot on investing in the big, integrated Aerospace & Defense firms at this time for other reasons.

A better way to cover the space end of solar flare induced problems is probably niche, specialty operators. Orbital Orbital Sciences Corporation (ticker: ORB) designs, builds and launches satellites and other space hardware. Orbital has a proven track record, decent fundamentals and backlog and is expanding through acquisition.

Astrotech Corporation (tick: ASTC) is in the business of payload services which entails hooking up one person's spacecraft with another persons booster (rocket). An increasing demand for launches would increase ASTC's business. ASTC is currently in a sales slump but has a low P/E, is trading below book value and carries less debt than industry peers.

Ball Corporation (tick: BLL)...you know...like Ball Mason jars...that Ball...has a neat subsidiary: Ball Aerospace and Technologies Corporation. Ball Aerospace manufactures satellites of the observation persuasion and does a bit of integration work as well. The downside here is that Ball Aerospace accounts for only 10% of Ball Corp's sales and 95% of that is U.S. Government contract work.

There are others in the space market but that is a start. Meanwhile, back here on Earth...

The U.S. electrical grid is not in the best shape to begin with and a Century class solar flare could very well cause a good deal of trouble. There a number of publicly traded companies that repair, maintain and build bits of the grid.

Pike Electric Coporation (tick: PIKE) is an interstate supplier of electric grid related services. PIKE does a lot of business in the mid Atlantic states which fits in nicely with this map based on a solar flare scenario whipped up by NASA:





PIKE handles power line construction and cleans up after regular old Terrestrial weather so they have a life outside of waiting for "The Big One".

EMCOR Group (tick: EME) is a bigger fish in the same pond in which Pike Electric Corp. swims. EME has about five times the market cap as PIKE, international exposure and a strong balance sheet. Looks like a potential winner.

Who knows when the next really big space weather event will occur? It could be 100 days or 100 years from now but it will happen and the Sun is entering the active part of its cycle. All of the companies discussed herein have lives outside of waiting for the space weather event of the Century but all appear to be in a position to gain from it.

DISCLOSURE: Author holds positions in ORB, ASTC and PIKE.

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