Great Call on CNOOC! What's Next?

Now that energy prices are soaring, it's not hard to find oil and gas stocks with some great gains. Few, however, have done as well as CNOOC (NYSE: CEO  ) . This China-based player has jumped more than 100% since last year on the strength of energy demand from all around the globe. And even with these big gains, the stock is still trading at just more than 13 times analysts' 2008 earnings expectations.

The investor community on Motley Fool CAPS has rated CNOOC a smoking five out of five stars, with more than 800 investors giving a big thumbs-up. And none has read the stock better than Domingus, who went bullish on CNOOC back in late 2006, deftly yanked that rating when the stock was peaking in the fall of last year, and earned a sweet 139 points.

Domingus is one of CAPS' All-Stars -- players with a rating of 80 or greater -- and has managed a stock-picking accuracy of 67% on calls while racking up more than 240 points. CNOOC hasn't been our CAPS star's only great call. Here's a look at a few other prescient picks from Domingus:

Company

Date Picked

Call

Points

CAPS Rating (Out of 5)

AMR (NYSE: AMR  )

10/30/07

Underperform

60

*

Alcatel-Lucent (NYSE: ALU  )

12/5/06

Underperform

46

**

Google (Nasdaq: GOOG  )

12/5/06

Outperform

35

***

Data from CAPS.

So what is this investor looking at these days? Here are a few recent calls:

Company

Date Picked

Call

CAPS Rating (Out of 5)

Thomson Reuters

4/18/08

Outperform

NR

Halliburton (NYSE: HAL  )

4/17/08

Underperform

*****

Wells Fargo (NYSE: WFC  )

4/17/08

Outperform

***

Data from CAPS. NR = not rated.

Not all of these picks may pan out, but they could be a good place to start some further research. In this week's column, I've decided to take a closer look at Wells Fargo.

A bank to bet on
Don't feel bad if you missed the first-quarter earnings release from Wells Fargo last week. Its report was mixed in with those of spotlight grabbers such as Citigroup and Merrill Lynch, who are stealing the headlines as they set new thresholds for how much money a financial institution can lose.

Wells Fargo didn't report stellar earnings, but if you expected it to, then you've been pulling a Rip Van Winkle over the past year. However, in the face of tremendous turmoil in the banking industry, the scant 11% drop in net income is downright impressive against its competitors' huge losses. In addition, the bank reported a 12% year-over-year bump in revenue, 19% loan growth, and an uptick in its net interest margin. On the downside, it wasn't totally immune from the credit problems and that showed up in rising charge-offs and nonperforming loans.

This performance is probably of little surprise to followers of Wells Fargo. During the housing boom, the bank stayed far more conservative in its lending practices than its competitors did, and it also doesn't have the heavy investment-banking exposure that's weighing on others, such as Citigroup.

Though Wells Fargo carries just a three-star CAPS rating, more than 1,600 CAPS players think the stock has legs. One of these bulls, timeodyin, chimed in with his support last week:

Management has made almost every right move for this financial leader. Strong (dare I say it?) conservative mortgage presence with minimal exposure due to their more stringent underwriting standards and prudent lending philosophy. Little to no subprime write-offs. ... $12B in equity lines is the only exposure they have and it pales in comparison to competitors.

And, of course, we can't forget that the bank has a big vote of confidence from everyone's favorite megabillionaire, Warren Buffett. His Berkshire Hathaway (NYSE: BRK-A  ) is the largest Wells Fargo shareholder, with a 9.4% stake.

So what's your take on Wells Fargo? Get in on the action by clicking over to CAPS. It's absolutely free to participate and already has more than 97,000 stock pickers chipping in to find the best stocks out there.

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