Book Review: Commodities Rising by Jeffrey M. Christian

Commodities Rising is an excellent, hype-free primer on the commodities markets. Mr. Christian, who heads CPM Group, a commodities research firm that provides consulting and investment banking services to individuals, institutions, and corporations, and international organizations. Christian does not believe that we are in a commodities supercycle. I do not agree with these thesis, but I appreciate the thoroughness of his arguments and his long-term perspective on the markets.
The book does an excellent job with providing a general overview of the various ways in which to participate in the commodities markets, i.e. futures, forwards, stocks, ETFs, etc. The author shares two particularly interesting insights about the commodities markets. First, they are filled with misinformation and outright lies. The commodities markets are assymetric as regards information. Secondly, most transactions take place in the cash market in the form of forwards, not the futures market deliveries. The weakness of this book is that there is very little in the way of concrete counsel on how to profit from commodities. He offers no specific companies that he particularly likes, nor trading or options strategies. Also, it can be a bit repetitive and boastful of the author's intelligence and experience.

Buy the drillers

The entire oil & gas equipment sector is dramatically undervalued. Baker Hughes(BHI) has a PEG ratio of 1.00. Schlumberger(SLB), which has gone up 60% in the last year and has been the best of breed in this group, has a PEG of 1.15. Halliburton(HAL) is selling at a PEG of 0.89. These are fire sale prices. Cheap oil is a thing of the past and these guys are the picks and shovels merchants of this century's gold rush.
Maybe it's going to take some consolidation for the full value of these stocks to emerge.

How do you say cheap in Italian? Eni

Actually, it's a buon mercato, but you get the point.
Eni(E) is the cheapest major integrated oil & gas giant out there. Let's look at the numbers: P/E: 4.7, 11.3(forward) Yield: 3% Enterprise multiple: 1.95 Price-to-book: 0.97.
This is not a fast grower, but no major is. Plus, they're big in places like Africa and Russia which could be trouble. I can't think of another reason the market is valuing this company so low. BG Group(BRG), which has a slightly larger market cap, is being valued at 18x earnings. Last Friday, Cramer was singing the praises of Total(TOT). How can he love that company and not Eni? Eni operates in many of the same places at Total and Its margins are better. Additionally, JPM just downgraded TOT last Wednesday.

An expensive but tasty Apple

Apple Inc.(AAPL) is on fire. The stock just passed the $140 barrier and some analysts say that they see over $200 in the near future. $200 may be a bit much, but I agree that the stock is going higher. Momentum players will ensure that. If you're a value investor, then this company looks awfully expensive(45x earnings, nearly 10x P/B). You're probably not going to want to go near it, EXCEPT, its PEG is 1.76. That's not bad at all for a company that's nearly doubling earnings year over year and selling the hottest product on the market.
They announce earnings on July 25th and everyone is expecting them to crush the estimates. If you've already been in the stock for some time, then you've made some terrific gains and should sell into the good news. If you're looking to get into the stock, I'd wait for a pullback of some kind before pulling the trigger.