energy stocks
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This Dangerous "New" Energy Crisis is Crippling the Middle East
Don't look now, but there are some problems developing in the global energy network.
It's hardly reassuring that the epicenter of all this is the Middle East.
The primary problem is hardly new. Actually, calling it an "old" problem is more accurate because the culprit is a collapsing network of delivery and storage that has been deteriorating for decades.
Unfortunately, this is hitting areas already beset by broad, accelerating economic shortfalls the hardest. That they also happen to be areas of significant unrest hardly improves the situation.
The latest is in Pakistan. There a combination of lower-than-expected water availability and a government powerless to provide the diesel fuel essential for the planting season means a population already on the brink is staring at food shortages.
The picture is very grim.
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What Germany's Energy Problems Can Teach Us About Our Own
Marina and I will soon board a plane for another trip to Europe.
We are off to Frankfurt, where I have meetings on European natural gas import costs; meanwhile, my better half gets to spoil our grandchildren, who live just outside the city.
My responsibility is to address the energy balance problems emerging for the continent. The focus may be on Germany and the rest of Western Europe, but these problems are emerging elsewhere around the world.
With Berlin opting to phase out nuclear power, the continent's largest economy now has a daunting task to assemble an energy mix that meets expected demand.
This started as a political tradeoff, but it is likely to become the major concern in the broader national strategy to stave off recession. A similar tradeoff is developing in the United States.
A much-ballyhooed German venture into solar and wind has hit a brick wall. There is now a played-down move to import additional nuclear-generated power from neighbors, but now the country is doing the unthinkable to meet its energy demands.
This environmentally conscious country, with one of the strongest green political movements in Europe, is now importing more coal than at any point in the past decade.
The options are limited, along with the time to decide on how to implement all of it. That is likely to result in a political tradeoff distasteful to just about every political party and interest group in Germany.
However, the problems do not end there.
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Conference Delivers Good News for Investing in Energy Stocks
The U.S. role in the energy industry was a focal point last week at a major conference of senior global energy decision-makers in Houston - and what came out of it was good news for those investing in energy stocks.
The 32nd annual IHS CERAWeek featured some 300 speakers, including senior industry executives and government officials, who provided fresh insight into energy's future.
Energy analyst, Pulitzer Prize-winning author and vice chairman at energy research firm IHS CERA Daniel Yergin, who presided over the conference, told Politico, "We've got to be aware of rosy scenarios, and I think experienced people ... are cautious about rosy scenarios. But I would say ... it's a mood of tempered optimism and confidence that technology will help solve our problem - continue to help us meet these big energy needs and these big environmental needs that we have."
IHS CERAWeek included discussions of new technologies, shifts in worldwide demand, regulatory concerns, and supply and demand.Optimistic conference participants agreed the energy industry is being transformed and said the industry offers plenty of good opportunities for investing in energy stocks.
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Two Energy Stocks to Buy Now Before Prices Rebound
If you're looking for energy stocks to buy, now's a good time to snag some deals.
Energy stocks have seriously lagged the overall stock market for some time now as the weak economy has reduced demand.
The Energy Information Agency released a report Feb. 27 stating that oil demand in 2012 was the lowest since 1996, and gasoline demand was the lowest since 2001.
Although it can be difficult to measure accurately, a slower-than-historical growth rate in China seems to have slowed demand from the world's largest importing nation as well.
As a result, the oil services exchange-traded fund (NYSE: OIH) is up just over 0.2% in the past year, compared to the overall market's 15% return. The Vanguard Energy ETF (NYSE: VDE) has a wider scope of energy companies, but also lags the market with a 12-month return of just 4.16%.
In spite of the current weakness in demand, the one thing we know for certain is that the global economy cannot pick up without an increase in demand for oil and gas. Although these stocks are out of favor right now, the odds are high that over the next several years they will become growth darlings once again as energy demand inevitably rises.
Patient contrarian investors can take advantage of this potential profit landfall by buying into these energy stocks now, while they are unloved and very cheap based on historical levels and future prospects.
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Watch What Carl Icahn Does to These Energy Stocks
Energy stocks have been largely left behind in the recent stock market rally - except for those with interest from activist investors like Carl Icahn.
You see, concerns about global demand as well as political pressure to focus on alternative energy have weighed on energy stocks. So have the low price and oversupply conditions in the natural gas markets.
Many of these energy stocks trade at what seem to be very low prices compared with the assets owned by the corporations and their future prospects.
This has attracted the attention of many activist investors looking to force the share price to unlock the real value of the underlying corporation.
One of the best-known activist investors, Carl Icahn, has accumulated several positions in leading energy companies in the past year because of low prices and under-valuations.
Take, for example, what Icahn's done with CVR Energy Inc. (NYSE: CVI).
Icahn owns 83% of CVR, a refiner that has seen its stock price soar recently as refining margins have improved. The company also has a fertilizer business that is a major beneficiary of lower natural gas prices.
The stock has better than doubled in the past year so it would be foolish for investors to chase the shares now.
But CVR does serve as an example of the sizable returns Icahn is looking to achieve in his foray into additional energy investments, like the following two stocks he's been accumulating.
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Why Oil Refiners Are Among the Best Energy Stocks to Buy Now
Shale oil production continues its upward path, increasing overall U.S. oil production and making specific groups of energy stocks among the best to buy right now.
In fact, the U.S. Energy Information Agency (EIA) reported last month that domestic oil production surpassed the 7 million barrel a day level, the highest point in nearly 20 years. Production this year, the EIA says, will rise by another 14%.
This is obviously good news for the companies producing that oil, and it gets even better. Many industries outside the energy sector, including chemicals and railroads, have benefited from the shale boom.
But there is one subsector in the energy industry that has reaped the rewards of plentiful oil from the Bakken and other areas more than any other, and that's the refining industry.
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Five Energy Stocks to Buy That Offer Juicy Dividends with Low Risk
The only thing better than a sector with a lot of growth potential - like energy stocks - is finding a financially sound group of stocks to buy within that sector that pays a healthy dividend to boot.
And a recent screen by investment research firm Value Line turned up five such energy stocks, all electric and gas utilities.
Technically, Value Line cast a wider net that included all stocks. The screen actually yielded 17 stocks, many of them well-known companies like McDonald's Corp., Lockheed Martin and General Mills.
But the beauty of an exercise like this is finding the less-obvious gems, which in this case turned out to be mostly energy stocks.
Value Line used several proprietary filters - financial strength, safety and timeliness -
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The Best Energy Stocks to Buy According to Industry Insiders
It is no secret to investors that energy stocks lagged the market in 2012 - but now in 2013 some are becoming the best stocks to buy as they head for huge gains.
The Energy Select Sector SPDR ETF (NYSE: XLE) has gained about 6.5% over the past year, below the 8% gain in the Dow Jones Industrial Average and the 11.5% rise in the Standard & Poor's 500 Index.
But just looking at 2013, you'll see XLE has risen 8.7%, compared to the Dow's 6% gains and the S&P's 5.13%.
And money is pouring into this sector from a key group of investors: corporate insiders.
As far back as 1968 legendary speculator Victor Niederhoffer and his mentor Professor James Lorie discovered that cluster buying of stock by corporate insiders offered substantial excess returns over the market. When three or more officers and directors of a company break out their checkbooks to buy their own stock there is a good chance that the stock price is headed higher.
This anomaly had been confirmed many times by academics and investors over the year and still holds true today.
The other metric with tracking when it comes to corporate insiders is buying by those two executive officers who are in the best position to evaluate the company's conditions and prospects - the chief executive officer and chief financial officer. If they are buying more shares in the open market chances are high they think the shares are cheap and good things are about to happen.
Best Stocks to Buy Now: What Energy Insiders Like
We are starting to see a substantial amount of insider activity in a few oil production and energy services names, like the following:
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This Key Energy Metric Could Make You A Lot of Money
Last week I discussed what EROEI is-and how to use it.
This week I'd like to talk about how this key metric affects the balance of your energy investment portfolio.
Now, this is certainly not the only element in determining preferable stock moves, but it's critical that you know the EROEI because it could make you a lot of money.
Recognizing the real elements that determine the genuine cost of energy production, EROEI is becoming an important factor in estimating profit margins.
And those margins certainly influence the performance of a stock as we've seen all across the energy value chain in recent months.
EROEI refers to the amount of energy used to produce energy.
If this ratio produces a figure of 1.0, EROEI is telling us that it takes one barrel of oil equivalent to produce one barrel as a result.
Anything under 1.0 means that more energy is consumed in the production process than is gained as an end product.
EROEI has the advantage of being a useful yardstick throughout the energy curve - from upstream production sites (wellheads, generating facilities) through midstream (gathering, transit, storage and initial processing) to downstream (refineries, terminals, wholesale and retail distribution, end use).
Some applications of EROEI are already in wide usage, although we don't tend to think about them in these terms. Energy-efficiency ratings on appliances, heating and cooling systems, windows, or building supplies are an application at the end of the energy curve.
But how can we use this to fine-tune an investment portfolio?
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Shale Oil Stocks are Poised to Earn Investors Big Profits
With oil production soaring in the United States, shale oil stocks will be pumping out profits for years to come.
It's all thanks to huge deposits of shale oil.
At least four new major shale oil plays including the Bakken in Montana and North Dakota, the Eagle Ford in Texas, and the Marcellus in Pennsylvania and New York, may have more than 20 billion barrels each of recoverable oil.
Each of these new shale oil plays has the potential to double the total reserves we have today.
In fact, the "shale oil revolution" will soon make the United States the world's leading producer of crude oil, a report from Goldman Sachs Group Inc. (NYSE: GS) recently predicted.
The United States will produce more than 10.7 million barrels of oil per day by 2017, the report said. That's more than any other country, including Saudi Arabia.
And even though oil prices are in a short-term swoon, the glut of shale oil is about to make savvy investors a huge fortune.
That's why you need to take a hard look at a particular group of shale oil stocks that stand to benefit most from this boom.
But first, you need to know how this came about.
To continue reading, please click here...
