In focus this week: a very cheap oil play that is already rebounding, timber and farmland, and the SITFA.

One of the largest independent oil producers in the world is really cheap! CNOOC Limited (NYSE: CEO).

The U.S. ADR is off 25% since the start of the big sell-off in oil, but despite the continued slide in oil prices, CNOOC has actually been rebounding.

David Hurd of Deutsche Bank said the early recovery in price is due to bargain hunters going after returns and operating margins that are, as he described them, head and shoulders above their international peers.

A Macquarie analysis shows CNOOC with enough cash to easily cover their costs and still pay their 3% dividend. And, the current stock price has already been discounted enough to allow Brent crude to drop to $70 from its current price near $100.

According to Barron's, this story gets better with the fact that their P/E is a skimpy eight down from its historic level of 11.5 and well below the rest of the industry at 12.

CNOOC production is 78% oil, which is higher than its competitors, and two thirds of its reserves are oil, not natural gas, which will be a huge boon when oil recovers, which it will.

Goldman upgraded the stock to a conviction "Buy" and also sees oil prices rebounding on Asia and Chinese demand. They have Brent running back to around $120 per barrel this year.

Almost everything is pointing to a good recovery in oil and CNOOC.

Watch this one!

Timber and Farmland Up Next

According to the Journal, there's a race on worldwide to convert paper money into hard assets, and timber and farmland are where a lot of it is heading.

Dennis Moon, of U.S. Trust's Specialty Asset Management division, says there has been a big uptick in the rush to farm and timberland as investors, who do not need liquid assets, look for places to avoid everything from inflation to a depression.

Moon said, "We are buying dirt with a long history of stability despite everything that has happened in the world economy."

Returns on timber and farmland come from two sources: the gross cash generated by the production on the land and the long term appreciation of the land itself. The total long-term return is in the low double digits.

That beats a 10-year Treasury at 1.6%, and without the guaranteed sell-off in treasuries that has to come soon.

And, according to Moon, despite the worldwide housing crunch driven sell-off in timber, the long-term returns on timber are about the same as farmland.

Timber however doesn't produce any annual income as farmland does. Timber is more of a big payday down the road investment, so you have to be able to live without the income during what Moon described as a 10- to 15-year investment.

As the dollar and the euro continue their money printing driven race to what appears to be a collapse, hard assets like land will become even more valuable as a real safe haven. Land that can produce an annual income, farmland, will be in very high demand.

It isn't for everyone, but it's definitely something we should be looking at as a defensive play.

Now, the SITFA

This week it goes to those people who thought there was a real estate crisis in California.

The Journal had a recent article about a three-bedroom, two-bath, 1,700 square-foot home, just down the street from FB headquarters, that's selling for, I hope you're sitting down, $1.295 million. You heard me right, million!

Are you kidding me? What happened to being under water in the golden state, and evictions, these folks just bought the house in 2007 for $985,000 and it already has a contract for more than the asking price.

This is a nice house, what we would call a starter, nothing special, just nice, but $1.295 million!?!

I'm sorry, my starter home was $37,500 and was almost identical to this one; a rancher with a two-car garage. Even with inflation since 1983, when I bought my first house, it can't be that much for a rancher.

I hope the folks buying this house have received big bonuses, they'll need it.

I wonder what the taxes are in this neighborhood for a $1.295 million house? I wonder if they have even thought about it.