Two companies taking advantage of the growing deficit
Today's Financial News - Posted August 25, 2009
Washington is spending this country towards its demise. These two companies will hep you put your hard-earned tax dollars back in your pockets.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): What does the government have up its sleeves this time? While the president is on vacation (playing golf with shady business connections), the White House put out a report detailing how the economy is much worse off than it originally anticipated.
Of course, Wall Street shrugs it off, virtually saying, “Washington was wrong? What else is new?”
Most intriguing, or alarming, is the White House’s latest deficit predictions. Instead of the $7 trillion estimate predicted in May, our executive branch is now expecting a gap of $9 trillion.
It turns out the notion of higher taxes really does decrease revenues.
With a cost of $2 trillion, it was an expensive lesson to learn for the rookie administration, especially as it tries to prove the benefits of a trillion-dollar healthcare overhaul.
Good luck with that
When news like this hits the Street, it is vital to remember, the Obama administration does not do anything unless it has positive political ramifications. You can bet the spinsters are going to turn today’s “dire” figures into a public-relations campaign for even more fiscal stimulus and government spending.
That is horrible news if you are a taxpayer or an American creditor. But fantastic news for the company’s already bloated from suckling on the raw teats of the American taxpayer.
The nation’s auto industry is currently sick in bed dealing with the hangover and rebound shock of the sudden weaning from public assistance.
Now that the $3 billion Cash-for-Clunkers program is officially over, automakers are wondering how long the artificially created dry spell will last.
The pain is just as bad for the nation’s car dealers. Not only are their showrooms going to be empty for the next several weeks or months, their banks accounts will look just as bleak until Uncle Sam finds his check-writing pen.
But not every stimulus-fueled company is forced to deal with the short-term gyrations created by a drive-by government.
Two companies that are in no jeopardy of giving back their recent stimulus-fueled gains are Oshkosh (NYSE:OSK) and Rentech (AMEX:RTK).
Shares of Oshkosh have soared by nearly 400% since I first mentioned the company’s investment possibilities earlier this year.
Thanks to a load of military-backed orders for vehicles suitable for the escalating fight in Afghanistan and the increased demand from infrastructure-related stimulus spending, the company’s top line is growing by the minute.
As a manufacturer of heavy equipment used in the building industry, the military and the public service sector, Oshkosh investors do not have to worry about a sudden turnaround as political attention moves on to the next hot topic.
While another set of triple-digit gains are unlikely, Oshkosh will continue to outpace the overall market, with equal or less risk, every investor’s ultimate goal.
Green with profits
For a little more risk, but plenty more potential in the return department, Rentech is worthy of our attention. Shares of the company are on the move thanks to the ever-increasing talk of a “green” economy.
If you read these pages often, you know I have covered this company several times over the past couple of months. There is a good reason. Its share price continues to rise.
In late July, shares of the synthetic-fuels developer were trading for just $0.50. Today, it will take over $2.00 to get your hands on the up-and-coming company’s revenue stream.
Why the surge?
After years of promising big potential, the $400 million company is finally making good on its potential.
First, the company announced its synthetic aviation fuel will be allowed in commercial-grade blends. The news opened the company to a multi-billion industry.
And most recently, a handful of airlines at Los Angeles International Airport announced they would be using Rentech’s synthetic diesel in the ground-based vehicles. It is a way for them to take advantage of Washington’s “green” kickbacks.
Investors should view this news as the turning point for the young company’s future. It is one of the first big stories that does not mention a “potential” market. Instead it is a fact that Rentech’s fuel will be in their tanks.
While I would be much happier to see these two companies surging in value without assistance from the political machine in Washington, smart investors will take the “green” industry gains and the free infrastructure handouts while they can.
With a public debt estimated to increase to nearly three-quarters of the nation’s GDP in the next decade, who knows how long the government will have the ability to spend?
We might as well get our tax dollars back while we still can.
Next Article: TFN Reader Grapevine Stock: Take a gander at Czech Republic Resource Corp. (CZHC)
Be the first to leave a reply.
Your comments are welcome
Follow TFN via RSS or Twitter |
 |
 |
 |
Advertisement
Latest Headlines
- The Big Picture for Sinobiopharma, Inc. (SNBP)
- Beazer Homes USA, Inc. (BZH) and Hovnanian Enterprises, Inc. (HOV) up despite horrid housing news
- The FDA catalyst: 2010 moves in MannKind (MNKD), Roche Holding (RHHBY), Acorda Therapeutics (ACOR) show it still works!
- Steepest drop since Feb. 2009: Here we go again!
- Is the silver run over? Coeur d’Alene Mines (CDE), Silver Wheaton (SLW), Alto Group (ALTO), Hecla Mining (HL), Endeavour Silver (EXK) close down