As so much of American’s daily existence depends on cheap oil, Dr. McPherson predicts peak oil spells the end of civilization. But, if it’s not already too late, perhaps it will prevent the extinction of our species. According to his Arizona Republic viewpoint:

The world peaked at 74.3 million barrels per day in May 2005. The two-year decline to 73.2 million barrels per day produced a doubling of the price of crude. Later this year, we fall off the oil-supply cliff, with global supply plummeting below 70 million barrels/day. Oil at merely $100 per barrel will seem like the good old days.

Within a decade, we’ll be staring down the barrel of a crisis: Oil at $400 per barrel brings down the American Empire, the project of globalization and water coming through the taps. Never mind happy motoring through the never-ending suburbs in the Valley of the Sun. In a decade, unemployment will be approaching 100 percent, inflation will be running at 1,000 percent and central heating will be a pipe dream.

He makes a very logical case for his opinion. It’s scary in that perhaps anything’s possible, but weirdly amusing in it’s presentation. I’m sure that most people think he’s crazy, but I know everyone hopes he’s wrong.

It’s not often that PNW drops below $40.00/share. Recent earnings haven’t lived up to analysts expectations, so there’s been some selling. However, this is only a short-term problem for PNW, and I’m a long-term investor in this company. I believe the selling presents a good buying opportunity, so I took advantage of it.

Pinnacle West has recently been approved for a rate increase which should improve it’s bottom line in the short-term. The company has also decided to expand it’s customer base by moving into the high growth area of western Arizona, and has also recently announced it’s expansion into solar-powered generation by building one of the largest solar-powered plants worldwide.

These ventures should provide continued long-term growth for Pinnacle West and assure their dominance in the State of Arizona, and further expansion into neighboring States.

Their 5.80% yearly dividend rate is looking good too. With all the recent Federal Reserve rate cuts, this dividend is much better (albeit riskier) than I would get if I left cash sitting in a money-market fund.

Stein Mart (SMRT) is actually trading near 5-yr lows and it looks like there’s a good reason for the new lows. Profits have been steadily and significantly decreasing over the past four quarters, with the most recent quarter posting a loss ($+0.37 –> ($-0.06)). The company also predicts extended losses into the next quarter ($-0.15). According to management:

The current environment is difficult for retailers in general, and particularly for companies like ours that cater to the “missy” customer. Our target customer has simply not been tempted to shop for apparel, either because the current fashion does not excite her, she is worried about the economy, or both. At the same time, our larger competitors have gone to extraordinary lengths to attract customers, including steep discounts off regular price merchandise which makes competing even more difficult for an everyday low price retailer like Stein Mart. We also continue to have problems with our Home business that has continued to track well below the Company trend. Improving the productivity of this area is a priority, but in a soft housing market, this will be challenging.

So, why am I watching SMRT? Although they do need to make some internal marketing/business changes to improve the bottom line, I don’t see this as a significant fundamental flaw in the way SMRT conducts business, but more of a cyclical trend.

SMRT is a fundamentally sound company currently trading at what I consider undervalued prices. It’s trading far under book value and carries very little debt. It should be able to weather further economic downturns, and rebound when the economy eventually turns around.

There are also three other specialty apparel stores that I’ve included in my watch list under the same reasoning.

• Christopher and Banks Corp. (CBK)
• Chico’s FAS Corp. (CHS)
• Cato Corp. (CTR)

Similar to SMRT, they are trading at yearly (or longer-term) lows, but all three of these companies carry NO long-term debt. They should all be withstand any short-term losses without being at risk for failure.

I don’t see any near-term changes for improving profits, so there’s still a good chance prices could fall even further… hence being placed on my watch list. Let’s see what happens over the next six months.

But, the way I look at it, this could present good buying opportunities. As the old contrarian saying goes, “You make money when you buy, not when you sell”.

I’ve been following these two regional banking sectors for more than a few years now and have become familiar with many of the individual companies within those sectors.

Here are a few stocks that I’m adding to my watch list. These are all banks with good fundamentals, have potential for future growth or M&A activity, and are trading at or near yearly lows.

• BBT: BB&T Corporation
• CARE: Carter Bank and Trust
• GRAN: Bank of Granite
• UWHR: Uwharrie Capital Corporation

Although I’ve placed these four stocks on my watch list, I won’t be buying any of them soon. I’ve recently closed my brokerage account at Vanguard and I’m not in any rush to open another elsewhere. IMO, the market still has more correction left in it, so these stocks should remain at these prices or fall even further.