The Earnings Issue
The Nasdaq 100 has lost about -27 percent of its value so far this year. And the almost as technology-stock heavy S&P 500 isn’t far behind at roughly -18 percent. Throw in the collapse of the bond market—led by a near doubling of the benchmark 10-year Treasury bond yield—and it’s small wonder so many have already proclaimed a bear market is underway.
We won’t argue stocks aren’t due for one, given the last period that really qualified was back in 2007-09. And the worst inflation rate in over 40 years, China’s pandemic lockdowns, the increasingly hawkish Federal Reserve, fallout from Russia’s Ukraine invasion and signs consumer spending is slowing are certainly reasons for worry.
Equally, however, 2022 so far has been among the best of times for energy investors. Led by continuing gains in best in class oil and gas stocks, the S&P Energy Sector Index has returned better than 48 percent. And even sector laggards are revving their engines, with the Philadelphia Stock Exchange Oil Service Sector Index (OSX) higher by nearly 42 percent and the midstream laden Alerian MLP Index returning more than 20 percent.
Feature: Key Takeaways from Q1 Earnings and Guidance Updates
Q1 earnings reporting and guidance updates are now all in for our EIA Model Portfolio and High Yield Energy List recommendations. Here are the key takeaways for each of them.
Note that we’ve broken our analysis into three sections for easier reference: MLPs and Midstream, Services and Producers.
Portfolio: The Shift is On
Investment in new oil and natural gas production and supporting infrastructure continues to badly lag the level of previous cycles. That promises to keep supply in catch up mode to demand for years to come. And we expect both commodity prices and energy stocks to push out to new heights, well above even the highs achieved in the previous cycle.
4/27/22 Capitalist Times Live Chat
Elliott Gue & Roger Conrad will host a Live Chat for all Capitalist Times subscribers on Wednesday, April 27, 2022 at 2 PM Eastern time. Please feel free to send your questions in advance to service@capitalisttimes.com.
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Feature: Riding Canada’s Energy Comeback
Seven months ago, we highlighted five reasons for patient energy investors to take positions in best in class Canadian energy companies.
To capitalize, we recommended two producers and three midstream companies. Two have been Model Portfolio stocks for many years: Pembina Pipeline (TSX: PPL, NYSE: PBA) and TC Energy (TSX: TRP, NYSE: TRP).
Portfolio: Upcoming Q1 Earnings and a High Yield List Swap
Per usual, Kinder Morgan Inc (NYSE: KMI) will lead off for our midstream energy companies later this week. New addition Baker Hughes (NYSE: BKR) will precede Schlumberger Ltd (NYSE: SLB) by a couple of days for services companies. And checking in for the refiners a few days later will be Valero Energy (NYSE: VLO).
US/EU Natural Gas Pact and Two New Portfolio Additions
You’ve probably seen the headlines about a deal between the US and European Union aimed at reducing Europe’s dependence on Russian fossil fuels.
One centerpiece of this agreement, unveiled on March 25th, is a US promise to work with international partners to ensure additional liquefied natural gas (LNG) volumes of 15 billion cubic meters (BCM) of natural gas for 2022 with “expected increases going forward.”
So, does this mean a surge in US natural gas prices and increased demand for US liquefied natural gas exports?
3/30/22 Capitalist Times Live Chat
Elliott Gue & Roger Conrad will host a Live Chat for all Capitalist Times subscribers on Wednesday, March 30, 2022 at 2 PM Eastern time. Please feel free to send your questions in advance to service@capitalisttimes.com.
We hope you’ll join us!
Russia and the Next Stage of the Energy Cycle
Earlier this month, global oil prices hit a 13-year high of nearly $140 a barrel. This week, they’ve backed off substantially.
As this issue of Energy and Income Advisor goes to post, Brent crude has dropped back to a level just north of $100. And West Texas Intermediate Crude at the Cushing hub has come back to the mid-$90s.
Energy stocks by and large have lagged the gains in commodity prices thus far in the cycle. But while holding their ground better on the retreat, they’ve also sold off from the highs of earlier this month. The S&P Energy Sector Index, for example, is still up almost 30 percent year to date. But it’s also down more than -10 percent from the high point earlier this month. The Alerian MLP Index of major dividend-paying midstream stocks has also lost about -10 percent of its value from the same date, reducing its 2022 gain so far to about 9 percent.
Feature: Many Happy Returns
Part three of our feature article series on Q4 earnings and guidance for our recommended Portfolio and High Yield Energy List companies. This edition covers the last seven reporters.
Live Chat with
Elliott and Roger on May. 25, 2022
Portfolios & Ratings
Model Portfolios
Balanced portfolios of energy stocks for aggressive and conservative investors.
Producers and Drillers
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
MLPs and Midstream
Our assessment of every energy-related master limited partnership.
International Coverage
Roger Conrad’s coverage of more than 70 dividend-paying energy names.
Experts
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Elliott H. Gue
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor
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Roger S. Conrad
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor