'Unanimous agreement on Greece'...

'Unanimous agreement on Greece'... Apple's incredible profits... Another way to profit from falling oil... More bad news for coal... Another big milestone for the U.S. shale boom...

According to reports this morning, European leaders have agreed to terms on a new bailout for Greece. Based on the early details, it appears this game of "chicken" ended in Europe's favor...

The deal will give Greece up to 86 billion euros ($96 billion) in new bailout loans. In exchange, Greek Prime Minister Alex Tsipras gave in to nearly all the demands of the country's creditors. From the Wall Street Journal...

The rescue deal – hammered out after 22 hours of at times acrimonious negotiations between the currency union's leaders and finance ministers – requires the Greek left-wing government's near-total surrender to its creditors' demands. But it gives the country at least a fighting chance to hold on to the euro as its currency.

"The deal is hard," Mr. Tsipras said after the summit, warning that the measures required by creditors will send the country's economy further into recession...

"The agreement was laborious. It took time but it was done," said Jean-Claude Juncker, the president of the European Commission. "There won't be a Grexit," Mr. Juncker added, referring to a Greek exit from the eurozone.

To finalize the deal, the Greek government must pass a series of new pension and tax laws by Wednesday. Incredibly, these are the same rules 61% of Greek voters rejected in last week's referendum.

Greece must also agree to sell or close down 50 billion euros of state-owned assets over the next few years, with most the proceeds going to pay off some of the country's debt and help recapitalize its banking system.

In return, its creditors have agreed to "consider" measures to make Greece's debt more manageable by giving it more time to pay back loans or reducing interest rates.

We've discussed our thoughts on the situation many times, so we won't rehash them here. In short, we expect a deal to be reached and for Greece to remain in the eurozone. But we also think additional bailout loans likely will only "kick the can" and delay a long-term solution a while longer.

Greece is bankrupt. It owes more than 300 billion euros (not including the latest deal). It has virtually no chance of ever paying this money back. Sooner or later, its European creditors will be forced to cut or forgive those debts to keep Greece in the eurozone... or Greece will default.

On a brighter note, consumer-products giant Apple is making headlines for a remarkable feat.

We discussed the company's latest "blowout earnings" in the April 28 Digest. But a report this weekend highlighted the dominance of its iPhone business in particular. From an article in the Journal...

Roughly 1,000 companies make smartphones. Just one reaps nearly all the profits.

Apple Inc. recorded 92% of the total operating income from the world's eight top smartphone makers in the first quarter, up from 65% a year earlier, estimates Canaccord Genuity managing director Mike Walkley. Samsung Electronics Co. took 15%, Canaccord says. Apple and Samsung account for more than 100% of industry profits because other makers broke even or lost money, in Canaccord's calculations.

Events last week highlighted the lopsided financial picture. Apple is asking suppliers to make a record number of new iPhone models. Meanwhile, Samsung forecast disappointing profits, HTC Corp. reported a quarterly loss, and Microsoft Corp. wrote down 80% of the value of the smartphone business it acquired from Nokia Corp. last year.

The news is even more impressive when you consider that Apple sells less than 20% of the world's smartphones. Unlike many of its "rivals" that use Google's Android operating system and must compete with each other on pricing, Apple is able to sell its phones for much higher prices.

The report also noted that the smartphone market is beginning to look more like the personal computer industry. As growth slows down, prices fall. But this, too, could be great news for Apple...

Average PC prices have plunged, and most manufacturers struggle to eke out profits. But Apple captured more than half of industry profits last year, even though its Mac line accounted for only about six of every 100 computers sold, according to Bernstein Research.

Despite the changing leaderboards of the past decade, some industry veterans say Apple's profit crown looks more secure.

"The dominance of Apple is something that is very hard to overcome," said Denny Strigl, former chief operating officer of Verizon Communications Inc. "Apple has to stumble somehow or another, and I don't think that's going to happen."

The news won't surprise Extreme Value subscribers. Editor Dan Ferris first recommended shares in June 2013, dubbing Apple a "World Dominator" and calling it "one of the safest stocks in the world."

Today's news is just the latest confirmation of his thesis. As he told subscribers in the July 2013 issue of Extreme Value...

Apple is the greatest mobile-device maker and the most valuable wireless communications business in the world. It's more valuable than any other smartphone maker, any wireless carrier, and any semiconductor company. It has tens of billions in annual free cash flows. And we believe it can grow for several more years.

The company is set to return $100 billion (more than one-fourth its current market cap) to shareholders over the next two years, raising its dividends as much as 33%. But we still think we'll see Apple's share price double within two to three years.

Dan's Extreme Value subscribers are up 103% so far and are collecting a 3.3% yield on their original purchase price.

Regular Digest readers know we've also been keeping an eye on oil. U.S. crude prices fell nearly 10% last week...

At its annual meeting last month in Austria, the Organization of the Petroleum Exporting Countries (OPEC) again pledged to maintain a production ceiling of 30 million barrels per day (bpd). But Bloomberg data indicates that OPEC already surpasses those numbers. In June, OPEC produced 32.1 million bpd – up almost 800,000 bpd from the previous month.

In the U.S., production hit 9.7 million bpd in May. And while that number stayed flat in June, production is still at its highest level in more than 40 years, despite the active U.S. oil rig count falling from 1,600 in October to 640 this month.

Plus, excess supply is filling up storage facilities. According to the Energy Information Administration (EIA), capacity at U.S. refineries and tank farms is up nearly 50% since September. Crude-oil inventories (excluding Strategic Petroleum Reserve, the emergency fuel storage) were at 466 million barrels – up about 75 million barrels from its five-year average.

But higher production and lower prices doesn't mean "doom and gloom" for all energy investors. While oil producers are getting squeezed, another sector could make a killing (in addition to oil refiners, which we discussed last week)...

Cheap oil always finds a home... It just needs to be transported. Refiners buy the cheapest oil they can from anywhere they can get it.

The most cost-effective method of transporting oil across land is through pipelines. But only oil tankers can deliver oil anywhere in the world. That's great news for companies that own tankers, where demand is greater than supply... And it's sending day rates for these massive, expensive ships soaring.

In the June issue of Stansberry's Investment Advisory, Porter and his team explained why...

With the "haves" – producers like the U.S. and OPEC – cranking out more and more oil, the energy-thirsty "have-nots" – places like Japan, India, and China – will take advantage of cheap prices by stepping up purchases.

This is a fundamental shift in traditional consumption patterns, and it's causing a fundamental shift in historical shipping routes.

During the first quarter of 2015, crude charters from the Persian Gulf in the Middle East to the west coast of India jumped 45% compared with the same period last year, according to shipbroker McQuilling. In addition, China is chartering more vessels to deliver crude from the west coast of Africa to its mainland. Depending on exact points of departure and arrival, the journey can take 65 to 75 days. This is much longer than traditional routes and ties up ships for longer periods... allowing crude shippers to raise rates...

Meanwhile, crude-oil-tanker supply is stagnant...

Porter and his team recommended the No. 1 "blue chip" company in the sector that is poised to thrive as the market heads higher. Subscribers who followed their advice are already up 15% in six weeks.

Speaking of commodities, there's more bad news for coal... and another big milestone for the U.S. shale boom we've been covering from the start.

For the first time in history, the U.S. generated more electricity from natural gas than from coal, its "dirty cousin"...

The Financial Times reported today that dirt-cheap natural gas was "used to generate 31% of America's electricity in April, while coal contributed 30%."

Those numbers might not impress you, but consider that coal was responsible for 45% of U.S. power just five years ago. From the article...

Since then, competition from cheap shale gas – unlocked by the rise of horizontal drilling and hydraulic fracturing – plus a growing regulatory burden on coal-fired power plants, has squeezed out coal use. That trend has accelerated in 2015.

Brett Blankenship of Wood Mackenzie, the research company, said the combination of cheap gas and new environmental regulations such as curbs on mercury and related pollution from coal-fired plants was having a particularly deleterious effect on coal generation.

"Low gas prices mean coal plants are running less, and when they run, their margins are typically compressed," he said. "So companies find it difficult to make the investments needed to comply with regulations and keep those plants running."

The number of active coal-fired plants continues to fall. Naturally, coal production is following suit... and the shares of coal producers are getting crushed.

As you can see from the following chart, Peabody Energy (BTU), Arch Coal (ACI), and Alpha Natural Resources (ANR) are each down 90%-plus in the last year alone...

New 52-week highs (as of 7/10/15): Acadia Healthcare (ACHC), American Financial Group (AFG), Bristol-Myers Squibb (BMY), CVS Health (CVS), Scorpio Tankers (STNG), Valero Energy (VLO), and W.R. Berkley (WRB).

In today's mailbag, subscribers object to last week's criticism of Steve Sjuggerud... Send us your thoughts to feedback@stansberryresearch.com.

"I would like to offer a rebuttal to the criticism of Dr. Steve Sjuggerud and his research that was so vehemently attacked by Dominick DiBenedetto in [the] Digest. To begin with, to assess the research and investing acumen of Dr. Sjuggerud based on YOUR decision to enter into an investment recommendation long after it was originally made AND after it had already risen triple digits does not tell us anything about Dr. Sjuggerud other than his original advice was spot on and very well timed. Unfortunately, your decision to buy high was not.

"Secondly, I have followed Dr. Sjuggerud's work for years and can honestly say that he produces some of the most profitable investment recommendations that I implement from paid research. I don't buy a lot of stocks recommended by others but Dr. Sjuggerud's work is worth the money just from the educational value it provides even if I NEVER bought a stock he recommended. The best pick I ever got from him provided me with a long-term capital gain well into the six-figure level.

"Last, but not least, I am fairly certain that Dr. Sjuggerud knows the difference between a water containment device and eternal suffering. You sir, obviously do not. Best regards and better profits." – Paid-up subscriber Ken McGaha

"Gentlemen, the importance of buying a stock at the right time and right price is, of course, very great. To balance off the somewhat inexperienced criticism of Steve's China calls in the letters section of the Digest of 7/9/15, here is my experience with [two of Steve's recommendations]. I tend to figure my ROI in terms of the compound annual growth rate – what would a bank have to pay me in interest if I put the amount of the stock investment in a savings account. Also, I have trouble with position sizing and too many positions (usually under 2% and about 60 positions) but I have lived through '87 and dot.com (how foolish we were) and seem more comfortable making good money on many smaller positions than fewer larger ones.

[Recommendation 1]:
9/22/14 50 @ $29.84
6/8/15 SELL 25 @ $54.68 P/L +$736 in .71 YR for 199%
7/7/15 SELL 25.14 @ $38.02 +$324.85 in .79 YR for 68.72%

[Recommendation 2]:
12/23/14 100 @ 40.91
7/1/15 SELL 100.54 @ 45.57 P/L +472.96 in .52 YR for 23.33%

"Steve was right on and his entry and exit points produced very good results – well done! I'm wondering if he is considering reentering these when the smoke clears in China and prices are considerably lower." – Paid-up subscriber B.K.

Regards,

Justin Brill
Baltimore, Maryland
July 13, 2015