Marvelmeister: PKZ
I've already taken some profits in PKZ, but only because I'm overweight in the stock at 14% of my portfolio. But I'm planning to hold most of my remaining shares for the long term because I'm bullish on the price of oil, and believe that the Kazakhstan tax disputes will ultimately be settled for a relatively modest sum. If we assume oil prices average in the high $40's for the next 18 months, then the stock could be a double from the current price of $36.62. I don't think oil will stay that high, but I think an average of $40 is a reasonable assumption. That's still higher than the average price of oil in Q3 when the Company earned $2.27 per share, so EPS of $10+ in 2005 could easily happen. I'm conservatively hoping PKZ rises to $50+ by year end. Of course, an aggressive way to play it is with the stock options. In fact, I own a few of the May 35 calls, and many of my shares were bought by me in an exercise of the 2004 February 15 calls. The August 35 calls can now be bought for $5.60, so if the stock rises to $50 by the 8/19/05 expiration date, a stockholder would gain a solid 37% from today's price, but the option holder would gain a spectacular 168%. Quite a difference ! Of course, if the stock drops to $35, the stockholder loses a mere 5%, while the option holder loses 100%. Nonetheless, an interesting speculation for those interested in PKZ with a greater risk/reward profile than the stock offers. Other option strike prices and combinations can yield a multitude of risk/reward scenarios. Good luck with PKZ !
AI
