Simple investments, with easy to understand investment theses, are one of the best ways to make consistently long-term profits in the stock market. And while I am a firm believer in this investment strategy, there is nothing wrong with the occasional bet on a well-researched speculative stock. Once a portfolio of lower-risk investments has been established, investing a small percentage of your money in a Powerball-like stock could be well worth your time and money. Below are three oil-related speculative investments I currently have marked on my watch list for further research:
Speculative Oil Services is a speculative play on the oil and natural gas revolution occurring in the United States thanks to hydraulic fracturing (fracking): the process of using pressurized water and chemicals to release oil and natural gas from rocks. Fracking is a controversial process among environmental groups who are worried about (among other things) the waste water created during the fracking process. That is where Heckmann comes into play as an environmental service company that is contracted by oil and gas exploration companies to transport, treat, dispose, and recycle waste water from drill sites all over America.
Heckmann Corporation (NYSE:HEK) began its life in 2007 as a `blank check’ company formed by Richard Heckman; a company with no actual business activities. Early investors in Heckmann Corporation (NYSE:HEK) were essentially investing in the CEO’s money-making track record, rather than an actual company. And an impressive track record Richard Heckmann has had over the years. In the 1990s, Heckmann was the founder and CEO of United States Filter Corporation, which under his leadership was acquired in 1999 at a price about 14 times higher than its 1991 IPO price. He similarly sold sporting goods maker K2 in 2007 to Jarden, shortly before forming Heckmann Corporation (NYSE:HEK). Richard Heckmann has certainly proven himself in the past. In just a few short years Mr. Heckmann has turned nothing into a company poised to benefit from the immense opportunity that is the US oil renaissance. Still a speculative company, but not a bad job thus far.
Speculative Renewable Oil When talking about Solazyme Inc (NASDAQ:SZYM), people often use “biofuel” to describe the company’s business activities. And while Solazyme Inc (NASDAQ:SZYM) is involved in biofuels, that description alone does not do the company justice. Solazyme is a renewable oil company; in all of oil’s various uses. Using its “indirect photosynthesis” process, Solazyme harnesses the power of nature’s greatest oil producers (microalgae) to create oils that are tailored specifically for (1) vehicle fuels, (2) industrial chemicals, (3) personal care and cosmetics chemicals or even (4) food products. Solazyme Inc (NASDAQ:SZYM)’s addressable market is much larger than simply a renewable source of gasoline.