Burning The Midnight Oil
The time has come, Great Ones. To say fair’s fair. To read emails. To answer and share.
Reader Feedback time has come. A fact’s a fact. It belongs to you. Great Stuff’s gonna give it back!
Your beds might not be burning, Great Ones, but our inbox is on fire.
You know they make creams for that, right?
It’s Reader Feedback day, and the only cure (for once) is not more cowbell. It’s your emails!
Today’s the day we dive into the Great Stuff inbox like Scrooge McDuck, swim around and reply to whatever emails stick…
That image can now join Midnight Oil’s bass line in your head for the rest of the day. You’re welcome.
Anywho, if you’d like to get in on the fun, all you have to do is send us your favorite stock market rant, burning stock or investing questions … or even ask about options trading.
How do you do that? By emailing us at GreatStuffToday@BanyanHill.com. We’ll do the rest.
Now, on to today’s featured presentation:
Dear Mr. Great Stuff,
Hey, Joe … where you going with that oil forecast in your hand?
Thanks for writing in, Great One, and for responding to yesterday’s poll question: “Will the oil rally continue?”
So, will the rally continue? My gut instinct says: “Yes.” But my head says: “It’s complicated.”
You’re not wrong, Joseph. In a typical year, oil and gasoline prices rally through the summer travel season. Then gas prices fall, while heating oil and natural gas prices rise heading into the winter, leading to a seasonal overall dip or lull in oil prices.
It’s the circle of liiiiife!
But right now? The two biggest drivers for oil prices are rather unique.
The first, obviously, is the “Great Reopening.” As more people get out and travel after being cooped up for nearly a year, demand will push oil prices steadily higher. We’ve already seen this play out, with oil prices rising some 40% so far in 2021.
But soaring demand is only one side of the equation. Supply is, naturally, the other side. And global oil supply is in a bit of a pinch right now. On Monday, talks between key OPEC members fell apart. Longtime allies Saudi Arabia and the United Arab Emirates (UAE) disagreed on the cartel’s oil production levels.
It seems the UAE has spent the past couple of years increasing its oil production equipment. After 2020’s shutdowns, the country is now ready to open the spigots and capitalize on black gold’s rally. But Saudi Arabia isn’t having it — it wants OPEC’s oil output to remain on the conservative side.
So, where does this leave oil prices?
Economists believe that if an OPEC deal isn’t struck, the market could be flooded with supply. Of course, this would lead to a plunge in oil prices much sooner than Labor Day.
If a deal is struck, then we return to business-as-almost-normal — “almost,” because we’re still seeing artificially high demand due to the Great Reopening. A deal means that oil prices could extend their gains even past the official end of summer.
So, there you have it. Once again, oil’s fate lies in the hands of OPEC. Figures.
And if you’re curious about early Great Stuff poll numbers about the oil lowdown, here’s the breakdown so far:
Will the oil rally continue?
- Yup, I’m all in on freedom juice: 53%
- Nope, OPEC is gonna kill this rally: 29.4%.
- Y’all still buying oil? 17.6%.
Wanna add your vote to the tally? Take the poll now!
Or, you know, just drop us a line with your rant at GreatStuffToday@BanyanHill.com.
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It’s finally Reader Feedback time!
Y’all were … quiet this week. Is everything all right out there? Anything you want to get off your chest? We’re here to listen … well, read.
By and large, the one thing on Great Ones’ minds this week is oil — that sweet, sweet Texas tea — and the cars that run on the stuff.
Let’s kick Reader Feedback into gear:
Cummins & Goin’s
Hi, really enjoy your posts. But seeing your Cummins stock holding, I wanted to warn you to look into the company before you hold much longer.
I work in the truck repair field, and they are a favorite (good power/weight ratio, dependable, good resale), but they are having severe parts availability problems. Weeks for common parts and many major parts are unavailable (many engine rebuilds refused as parts unavailable/engine swaps instead).
If these parts issues continue, the company will take a major hit. Keep on truckin’. — Ron V.
Thanks for writing in, Ron! I appreciate your concern — seriously.
I mean, you Great Ones aren’t just buying random tickers you read … right? Y’all still do that whole “due diligence” thing like Ron here?
So, Great Stuff Pick Cummins (NYSE: CMI). What’s the deal with this sucker? The short answer is … I’m keeping a close watch on Cummins right now.
I like the company’s hydrogen fuel cell potential — this much is true. It’s up there with Plug Power (Nasdaq: PLUG) as one of my recommended ways in on the hydrogen power boom.
Cummins’ reliance on diesel — and the oil sector’s current volatility — are really messing with the stock. While almost every other auto giant is suffering the same parts availability problem that Cummins’ faces … the holdup isn’t doing Cummins any favors right now.
CMI shares currently trade near price support between $230 and $235. With that in mind, I expect CMI to rebound from here. But if it doesn’t … we’re going to look for the exits on CMI, take our meager profits and scram.
Anyway, you’re not the only one writing in about Great Stuff Picks that are shaking up the auto market right now…
Dealer? I Hardly Know Her
Hey Mr. Stuff. My wife and I went car shopping together (hold your applause) this weekend. I was told there would be Fourth of July sales. I did not find Fourth of July sales. What I did find was — nothing. We stopped at four dealers and one junky lot as a last resort. Hardly any used trucks at any of them.
We got home, and my wife suggested I look at CarMax on the internet. This is new to me (didn’t exist when we bought our old truck) and was less frustrating than going back outside and dealing with people. I found a used Toyota pretty quick a few counties over and, while overpriced (I mean, it’s a Tacoma) … it saved a few hours on the dealership pavement so far.
Have you used CarMax before? Am I just an old fogey out of the loop? Thanks for your research and kind (sarcastic) words every day. — Karl P.
Thanks for writing in, Karl! And might I say, welcome to the digital auto market … or something like that. We’re glad you’re here.
One of the reasons CarMax (NYSE: KMX) is in the Great Stuff Picks portfolio is because I personally like the company.
In fact, I’ve bought my last three vehicles from CarMax. Note: This is not a paid ad. I genuinely like the company.
I mean, what’s not to like? No-pressure car searching. Find what you want before you go — no haggling over price, payments, etc. Bada bing, bada bang, you’re out the door with a new (to you) vehicle.
The alternative? Spend your entire Saturday haggling with a dealer who has to “check with his manager” 25 times before confirming a price. No thank you.
It’s one of the big reasons why our Great Stuff Picks KMX stock recommendation is currently up 58%! (Congrats to all of you who got into this pick, by the way!)
I don’t have to tell you, Karl, that used car inventory is vanishing all across the country … for varying reasons. New cars became hard to find during the pandemic as factories shut down and, later on, that whole “chip shortage” thing really threw a wrench into auto production.
So everyone pounced on the used car market. And that well ran dry fast. If people are having trouble getting their hands on new cars, fewer used trade-ins are coming in as well. Heck, some used cars are even more expensive than new models now. This is madness.
Combine those factors, and the used car market is in a vicious cycle, innit?
Now, did we predict all this unfolding when recommending KMX? Eh … not quite. But the pandemic lockdowns and the ensuing new-car shortage only helped spotlight the strengths of CarMax’s business model.
No one really wants to march ‘round dealerships all day looking for the one good deal that already got away. Haggling with used car reps? No need. We have technology…
CarMax and Carvana (NYSE: CVNA) already got people hooked on buying cars online before the pandemic, and in that time, the entire auto market shifted in favor of digital car sales. Turns out, more people are comfortable buying online when you give them the option to test drive the car and return it like you would with any in-person dealership. Who knew?
Anyway, before I blabber your ear off, my point is that the pandemic didn’t really hurt CarMax … in fact, it made the company stronger. And Great Ones are making bank on it, as KMX keeps hitting new highs.
What about you, though? Yes, you out there who didn’t write in for Reader Feedback day!
Have you ever bought a car online? Did you get into our trade on CarMax? And where are things headed with that dang oil market?
Share your thoughts (market-related or otherwise) with the rest of the Great Ones out there: GreatStuffToday@BanyanHill.com. I read each and every email personally, so don’t think you’re just sending words off into the void. Keep on writing in, Great Ones!
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Until next time, stay Great!
Editor, Great Stuff