Cheap Stock, Cheap ETF to Consider
The United States Natural Gas ETF(UNG) . There was an interesting article in The Wall Street Journal this past Friday that sums up a large part of my approach to investing:
In short, the news about natural gas is awful--exactly the type of conflagration that growth investors hate, but value investors love. "Everyone who has a brain should be thinking of how to make money on this in the longer term," the renowned investor Jeremy Grantham of GMO wrote recently.
While I am not necessarily a "value" investor -- you will not find me pouring into NFLX, RIMM and RSH -- I do appreciate a good bargain, particularly if I see a legitimate forest for the trees. And, as the Journal article explains, as bad as it seems now for natural gas, the future looks pretty bright. I could not agree more -- an oversupply of natural gas will make it the no-brainer, default choice to solve a whole host of energy problems. Why rely on oil to power daily life when you can cook with gas?
ETFs do not always make the greatest long-term plays, however, if you time it right, you can seize short-term gains in UNG.
The UNG May $15 put closed this past Friday's session at 44 cents with the ETF ending the session at $15.72. This was right around Robert's target price to cover and close the trade for close to a double. He will update what he did in this week's newsletter, which goes out to subscribers Tuesday morning.
Even though it's an ETF, I am considering opening a small long position in UNG. I also plan to consider natural gas stocks to play the long-term upside I anticipate.
Time Warner(TWX) . Earlier this month, I wrote Why I am Long Time Warner. In it, I explained the position of strength the company operates from as digital media continues to transform traditional areas of the space such as cable television and movie distribution.
While I am not much of a P/E ratio guy, it's difficult to ignore TWX's forward P/E of roughly 10.5. The company reports earnings Wednesday morning before the bell. As a long-term investor, unless the company undergoes a sea change, I will use the aftermath of the event to add to my position one way or the other.