At the beginning of each year, we update our outlook for the economy and commodity prices for the year ahead. Although our forecast necessarily evolves over the course of the year based on economic data and corporate earnings reports, stepping back to take in the big picture helps to establish a basic roadmap and strategy.
Given the sea changes underway in global energy markets, this exercise is of particular importance as we head into 2015.
The plunge in global oil prices that occurred last fall reflects growing production and spare capacity in North America and slowing demand growth in emerging markets. Although investors shouldn’t rule out the potential for short-term bounces, the down-cycle in the energy patch will take at least six to 12 months to play out.
When the crude-oil market finds a new balance, investors will have a golden opportunity to pick up shares of high-quality energy companies at favorable valuations.
However, this epic buying opportunity has yet to arrive. Until then, investors must remain patient and focus on high-yielding names that pay sustainable dividends and growth stories that don’t hinge on commodity prices.
In this issue, we review our predictions for last year (see Looking into the Crystal Ball), roll out our predictions for 2015 and update our outlook for the stocks in our International Portfolio and International Coverage Universe.
The price of a mixed barrel of NGLs on the Gulf Coast has plummeted by 45 percent since the end of the third quarter.
Surging production in the Marcellus Shale has also created challenges for producers and has important implications for investors and natural-gas prices in other regions.
Investors still flock to initial public offerings of master limited partnerships.
US propane exports have soared to a record high--and there's more upside to come.
Despite management's best efforts, there's more downside in store for Linn Energy.
The prospect of sky-high yields may draw some bargain hunters to hard-hit upstream master limited partnerships; history suggests that there's more downside to come for these names.
Warren Buffett's biggest investment mistake holds an important lesson for investors eyeing value opportunities in the energy sector.
We pounded the sand for Hi-Crush Partners LP in early 2013, when the stock was a high-yielding value play. Today, investors need to take their heads out of the sand and sell.
Unless we stand on the cusp of a new ice age, investors shouldn't expect a sustainable rally in US natural-gas prices.
Elliott and Roger on Jan. 27, 2015
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.