Five Energy Investments to Buy for Profiting from More than Oil

Paul Dykewicz

Five energy investments to buy for profiting from more than oil include natural gas providers.

The five energy investments to buy for profiting from more than oil feature two funds and three stocks that are showing strong promise to appreciate while also paying dividends. Rig activity by the Organization of the Petroleum Exporting Countries (OPEC) has significantly lagged lately likely due to a substantial amount of oil that has been held off the market, except by Iraq, according to BofA Global Research.

The situation also raises questions among industry observers about how forcefully OPEC activity may ramp up during 2022, especially if U.S. oil production growth surprises to the upside, BofA opined. Rising U.S. oil production gains could result in an unexpected tapering of output by OPEC+ nations at some point in 2022, the investment firm added.

Gas Exploration and Production Aids Five Energy Investments to Buy

With uncertainty about how oil production may progress later in 2022, hydrocarbon energy such as natural gas may find an enhanced role in meeting the needs consumers and businesses alike. Investors who like to back companies that produce strong free cash flow should be pleased that the 15 energy stocks covered by BofA are forecast to increase that performance metric by 74% between 2023 and 2021.

Gas exploration and production (E&P) generates the highest free cash flow in the energy industry, not midstream activities such as storing, processing and transporting crude oil and raw natural gas products, pipelines and storage facilities, refining or oilfield services (OFS). No other energy sector will even come close to generating this kind of free cash flow growth over the next couple of years, BofA reported in a recent research note.

Not completing the Keystone Pipeline, opening federal lands for drilling, overregulating on permitting of existing fields or releasing more than a four-day supply from the Strategic Oil Reserve have stoked inflation with no White House response other than to ask OPEC to step up production. Common sense has apparently been abandoned in Washington, said Bryan Perry, a Wall Street veteran who now heads the Cash Machine investment newsletter, as well as the Premium Income, Quick Income Trader, Breakout Profits Alert and Hi-Tech Trader advisory services.

Paul Dykewicz interviews Bryan Perry.

Perry Picks One of Five Energy Investments to Buy for Profiting

Perry proposes investing in energy through the Alerian MLP Exchange Traded Fund (NYSE: AMLP), which seeks investment results that correspond generally to the price and yield performance of the Alerian MLP Infrastructure Index. The index is a capped, float-adjusted, capitalization-weighted composite of energy infrastructure Master Limited Partnerships (MLPs) that earn most of their cash flow from midstream activities such as the transportation, storage and processing of energy commodities.

Chart courtesy of www.stockcharts.com

The United States is the world’s largest producer of oil and gas, with MLPs providing exposure to long-lived assets that generate inflation-protected cash flows. Plus, MLPs have low correlation to other yield-oriented investment such as bond and utilities.

Exclusive  Three Energy Stocks to Fuel Performance

Dividend lovers will appreciate that Alerian MLP ETF offers a current dividend yield of 7.7% and does not force investors to contend with a troublesome K-1 document. I once asked a partner at an accounting firm what he advises clients to do if an investment sends a K-1 at the end of each year and he replied, “Sell it.”

Carlson Chooses XLE as One of Five Energy Investments to Buy

The top energy investment for conservative to moderate investors recommended by Bob Carlson, a pension fund chairman, is Energy Select SPDR (XLE).

Chart courtesy of www.stockcharts.com

Energy stocks had a strong finish to 2021 and most of the reasons for it continue in 2022, said Bob Carlson, who also heads the Retirement Watch investing newsletter. Inflation is likely to remain high for much of 2022 and perhaps longer, likely lifting energy stocks, which traditionally serve as a good inflation hedge for such conditions, he added.

“In addition, capital investments in the energy sector lagged the last few years, continued Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. “Capital investments aren’t going to surge enough to increase supply anytime soon. In fact, some governments are discouraging or prohibiting additional investments in traditional energy sources, and many banks and other capital sources reduced their exposure to the sector as part of their environmental policies.”

The result is demand likely will surpass supply, without a recession, Carlson counseled. Many energy companies, especially shale oil producers, have made clear that they will be more attuned to shareholders going forward. Instead of investing heavily to maximize production, energy companies will focus on profitability and ensuring shareholders have cash distributions and stock price appreciation, he added.

Pension fund and Retirement Watch chief Bob Carlson answers questions from columnist Paul Dykewicz.

Five Energy Investments to Buy for Profiting Include EOG Resources

Energy is one of the limited number of industries that are benefitting from the current rising yield environment. Increased prices are producing buying opportunities for energy industry investors, according to the Fast Money Alert trading service led by Mark Skousen, PhD, and Jim Woods.

Mark Skousen, a descendant of Benjamin Franklin, meets with Paul Dykewicz.

EOG Resources, Inc. (EOG) is an American energy company engaged in hydrocarbon exploration. Headquartered in Houston, Texas, the company recently was recommended by Skousen and Woods in Fast Money Alert. The stock produced a fast, double-digit investment return and they chose to recommend that their subscribers sell the position to cash out.

They recommended EOG on Oct. 4 but opted to recommend the stock’s sale on Jan. 31 after it has soared 33%. However, the stock remains a recommendation of BofA.

Chart courtesy of www.stockcharts.com

Skousen, named one of the world’s Top 20 living economists by www.superscholar.org, is the leader of the Forecasts & Strategies investment newsletter, as well as the Five Star Trader, TNT Trader and Home Run Trader advisory services. Woods writes the Successful Investing and Intelligence Report investment newsletters, as well as heads the Bullseye Stock Trader and High Velocity Trader advisory services.

Exclusive  Four Sports Leisure Stocks to Acquire While Russian-made Missiles Continue to Fire

Jim Woods and Paul Dykewicz discuss stocks to buy.

EOG Shines Among Five Energy Investments to Buy for Profiting

BofA set a price objective on EOG of $118 and praised the stock for offering the highest dividend yield of exploration and production companies. The investment firm rated EOG among its top ideas in the “conservative beta” category.

Two key risks for EOG to attain BofA’s price objective are the oil and gas price and margin environment, as well as any significant delays to the new upstream projects critical to its production targets. BofA wrote in a recent research note that it expects EOG to lower cost guidance over the course of 2022 to clear the way for greater clarity on cash return priorities, such as enhanced emphasis on ordinary dividends and buy backs rather than “one off” special dividends.

With a new CEO at the helm of EOG, BofA expects the company to pivot to moderate medium-term growth and provide the tools to win back investors, while offering conservative exposure to an ongoing commodity recovery. BofA forecasts that EOG will be able to sustain a 3.3% dividend yield, the highest among the “pure play” E&Ps.

APA Ascends into Five Energy Investments to Buy

APA Corporation (NYSE: APA), the Houston-based holding company for Apache Corporation, is engaged in hydrocarbon exploration. BofA recommends the company, gave it a price objective of $47 and views it as a good value investment in the energy industry.

Modest international gas exposure bolsters APA’s unhedged free cash flow outlook that is 60% committed to give back to the company’s shareholders, BofA wrote. In fact, APA could theoretically buy back 20% of its stock in 2022, the investment firm continued.

Ways to top the $47 price objective would include: 1) higher commodity prices 2) exploration success in Suriname 3) exploration success and 4) increased drilling activity in Egypt, BoA wrote. Risks to achieving the price objective are: (1) lower commodity prices (2) Egyptian political risk and (3) exploration risk in Suriname.

In addition to commodity price leverage, Apache has two organic catalysts that BofA wrote can narrow the valuation gap: improved contract terms in Egypt that can reinvigorate activity and exploration success in Suriname, where success to date appears to be a free option.

Chart courtesy of www.stockcharts.com

Ovintiv Finalizes Five Energy Investments to Buy for Profiting

Ovintiv Inc. (NYSE: OVV), once known as Encana Corporation, is a hydrocarbon exploration and production company headquartered in Denver. Founded and previously based in Calgary, Alberta, the company then was the largest natural gas producer in Canada.

BoA set a $56 price objective on Avintiv but that was based on $60 Brent / $56.50 WTI oil prices, rather than the current levels that are about $30 above both right now. Risks to attaining BofA’s price objective are (1) the oil and gas price and margin environment, (2) significant delays to the new upstream projects, (3) inability to capture the price environment due to cost pressures and (4) potential currency exchange risk.

Exclusive  Three Leisure Stocks to Buy as People Increasingly Travel and Fly

Outperformance is possible, too. It could happen, BofA noted, amid potentially improving cost of capital as the company deleverages its balance sheet and increased oil & gas prices.

Chart courtesy of www.stockcharts.com

COVID-19 Concerns Continue as Cases and Deaths Keep Climbing

Data show the new Omicron subvariant is transmitting faster than the original, so public health officials still are warning not to ease restrictions and calls for vaccinations prematurely. Plus, Pfizer-BioNTech moved a step closer to authorization for their vaccine aimed at children under the age of 5.

The Centers for Disease Control and Prevention (CDC) reported that the continuing threat is leading additional people to obtain COVID-19 boosters. But more than 60 million people in the United States remain eligible to be vaccinated and have yet to do so, said Dr. Anthony Fauci, the chief White House medical adviser on COVID-19.

As of Jan. 30, 249,892,470 people, or 75.3% of the U.S. population, have received at least one dose of a COVID-19 vaccine, the CDC reported. Those who are fully vaccinated total 211,695,131, or 63.8% of the U.S. population, according to the CDC.

COVID-19 Concerns Subheading

COVID-19 deaths worldwide, as of Feb. 2, topped the 5.6 million mark to hit 5,688,006, according to Johns Hopkins University. Worldwide COVID-19 cases have zoomed past 381 million, reaching 381,722,919 on that date.

U.S. COVID-19 cases, also as of Feb. 2, soared beyond 75 million, totaling 75,350,359 and causing 890,770 deaths. America has the dreaded distinction as the country with the most COVID-19 cases and deaths.

The five energy investments to buy for profiting from more than oil give investors a chance to avoid the early-2022 market pullback. Even though traditional oil and gas investments have fallen out of favor with many investors who have adopted environmental, social and executive governance standards, open-minded Investors willing to invest in established energy stocks may find both profitability and dividend payouts.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.

 

 

 

 

share on:

Like This Article?
Now Get a FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE


img
share on:

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader
LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader
LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener
LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program
LEARN MORE HERE

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader
LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor
LEARN MORE HERE