Where will energy investors make money in 2019? I think the answer will surprise you. Click on the short video below as I outline a couple sub-sectors which should prove fruitful this year–and FIVE stocks within those that I think will do great. A rough transcript is below the video (which is only 3 and a half minutes). Don’t forget to subscribe to my YouTube channel.
Hi, I’m Keith Schaefer from the Oil and Gas Investments Bulletin. My job is to give my subscribers the best money making ideas in energy.
Today I’ll tell you where I think there is money to be made in 2019 in energy.
If you watched my last video, you’ll know I’m quite neutral on oil prices this year, which is not good news for most oil producers. But there are a couple exceptions to that rule.
There are a couple very large independent producers who generate incredible cash flow with WTI prices in low to mid $50s. They are paying off their large debt at an incredible pace, and just the deleveraging alone will make these stocks go up if oil prices stay in the low to mid $50s. My subscribers got a full report on my favourite just before Christmas.
Then there are two intermediate sized producers who are so profitable – meaning their multi million dollar oil wells pay out so fast – they can generate cash – and I mean so much cash, that companies in other industries would be jealous – that I want to own more of them. Yes there are actually two producers with such incredible economics I can see myself buying more of them in 2019. I can send you those reports risk free if you choose to subscribe.
But that’s it for oil producers. I think small caps stay challenged. I think US oil stocks are quite gassy, and I continue to be a natgas bear due to fast rising US gas production. So I’m not there.
No, I think A Big Theme for 2019 could be midstream, or pipeline related stocks in the US. Here’s why.
First off, everybody hates them, especially the MLPs, the Master Limited Partnerships, a sector that pays out big dividends. But second, they are now living and actually growing within cash flow for the first time in years – maybe ever.
When sentiment is awful and fundamentals are good and improving – that’s an investor’s dream!
After the oil price collapse in 2014, MLPs never recovered. They were trading at high multiples and low yields. But the Market found out these pipeline stocks did have a small amount of price exposure, and a bit of volume exposure as well when prices collapsed… and a lot of debt.
The management teams of these companies are learning their lessons, just like the producers. They are now living within cash flow. And with the huge increase in both oil and natgas production, volumes in the pipelines are growing – which means revenue is growing.
In late 2018, there was a huge drop in oil prices, natgas prices and high yield debt – a perfect trifecta that threw pipeline stocks to the mat. To me, that’s an opportunity. I can now buy some of these midstream stocks at the lowest valuation in years, if not in history, at a time when cash flows are growing and debt is declining.
I’ve got full reports on THREE different US midstream stocks where this is happening right now. I tell people all the time – I have NO idea where the oil price is going; nobody does. But one thing I DO know with absolute certainty is that the US will be increasing production in both oil and natgas in the coming years.
So that, I can invest in – when I KNOW what’s going to happen.
If you want to read the three company reports in this midstream sector, take out a risk-free trial subscription to the Oil and Gas Investments Bulletin today. Just google me, Keith Schaefer, and my website will come up.
Have a Happy New year and thank you for watching.