Last month, I showed you it’s possible to make 1,000% as a “hoarder.”
As shareholders of Seabridge Gold learned recently, this strategy – of buying hated, cheap resource assets in anticipation of higher prices – can result in astounding, ten-bagger gains.
We need to know all about “hoarding” right now because a similar situation may be setting up in the natural gas business.
Natural gas prices – and natural gas stock prices – are in the basement right now. New drilling technologies have brought on a ton of new supply… but emerging demand for power generation and transportation could double gas prices in the coming years.
That’s why it’s time to start learning how to hoard “PUDs.”[ad#Google Adsense]PUD stands for “Proven Undeveloped Reserves.” These are undeveloped gas wells with zero exploration risk. Firms aren’t extracting the gas, because prices are so low. Typically, PUDs are located in the middle of proven fields just waiting to be drilled.
Right now, the stock market is offering incredibly cheap PUDs.
The price of natural gas is so low, investors aren’t willing to pay much at all for future production of PUDs. Companies only receive stock market value for their current productions and cash flows… So promising properties are selling for peanuts. There’s zero investor interest in the stuff. Everybody thinks natural gas is dead.
We have a “Steve Sjuggerud” situation developing here. These assets are hated… they’re cheap… But we don’t yet have an uptrend in natural gas and natural gas stocks. It’s early in this game – but not too early to start doing our homework. So let’s check out some ideas on locating cheap PUDs…
Below is a table of natural gas producers that trade on the stock market. I figured out the price of each company’s PUDs per share, in thousand cubic feet (MCF) equivalent increments. We want to buy massive amounts of PUDs as cheaply as possible.
This is a broad-brush approach, based on the price of the natural gas in the ground. (We didn’t factor in debts, for example.) It gets us a rough idea of where to find values in gas.
That’s the first step in putting together a portfolio that could return you 1,000% as natural gas prices emerge from this downturn.
I’m convinced natural gas will be a huge bull market in a few years. In a future essay, I’ll dig deeper into some of these companies… I’ll identify the best operators in the best regions of North America.
I’ll also show you how electrical and transportation demand could send their shares up hundreds – maybe thousands – of percent in the coming years. Stay tuned…
— Matt Badiali[ad#jack p.s.]
Source: Daily Wealth