The Summer of Growth
There’s no doubt it’s been a disappointing summer for energy stocks.
Energy stocks were the best-performing group in the S&P 500 from the March 23rd lows through the June 8th peak, soaring 96.5%. However, from June 8th through the present date, energy reversed course, falling about 22.9% compared to a return of just under 9% in the S&P 500.
And that’s despite the fact that oil prices have continued a steady drift higher all summer from around $38 in early June to approximately $43 today while natural gas prices have climbed steadily from a June 25th low under $1.50/MMBtu to above $2.60/MMBtu.
Portfolio: Earnings and Guidance
Q2 results and guidance updates are all in for Model Portfolio and High Yield Energy List recommendations. The bottom line is in the worst quarter for the US economy in at least 90 years, all defended their strong balance sheets and stayed on track for long-term growth.
Endangered Dividends List
Four more Energy and Income Advisor coverage universe companies have announced dividend cuts since our July 22 issue went to post. Two are super majors BP Plc (London: BP, NYSE: BP) and Eni SpA (Italy: ENI, NYSE: E). We remain convinced that the majors’ business model will stand the test of time going forward as it has in the past.
Endangered Dividends List
Four more Energy and Income Advisor coverage universe companies have announced dividend cuts since our July 22 issue went to post. That’s actually less so far than we expected going into this season for Q2 earnings reporting and dividend declarations, though there’s still risk of multiple high profile cuts in the next few weeks.
Portfolio: Earnings and Guidance
Roughly one-third of the Model Portfolio and High Yield Energy List companies have now announced their Q2 results and updated guidance. As expected, the numbers weren’t pretty. And guidance wasn’t everything we could have hoped for either, with most companies expressing a generally cautious outlook.
Energy’s Best are Often its Biggest
This week, frac sand MLP-turned-C-Corp Hi-Crush Inc (OTC: HCRSQ) opened a new chapter in its long slide, filing for Chapter 11 bankruptcy.
It’s been literally years since this company was an Energy and Income Advisor recommendation—or since we’ve rated shares anything but a strong sell. But Hi-Crush’s now total demise does offer us several key lessons, as we build positions in best in class companies to capitalize on an energy sector recovery.
First, this bankruptcy is yet another demonstration that C-Corp conversions of MLPs are no antidote to financial and operating pressures.
Endangered Dividends List
There have been zero dividend cuts in our Energy and Income Advisor coverage universes since the June 18 issue. That could change quickly over the next several weeks, as the 45 companies in the Endangered Dividends List declare their dividends for the summer season.
Energy M&A Heats Up
What do super major oil company Chevron Corp (NYSE: CVX) and leading US rooftop solar installer Sunrun Inc (NSDQ: RUN) have in common? They’re on the leading edge of a building wave of energy mergers and acquisitions.
Don’t Sweat DAPL: There’s Still Life in Midstream Stocks
After a series of rulings rejecting federal permits for new pipelines, the US District Court for D.C. actually threw out one for an already operating one. The result: An order to immediately shut down the $3.8 billion Dakota Access Pipeline, which transports oil from the Bakken shale of the upper Midwest.
Endangered Dividends List
There have been zero dividend cuts in our Energy and Income Advisor coverage universes since the June 18 issue. That’s a merciful break in what has been non-stop action since early March. But it’s no reason to be complacent about dividend risk in the energy sector.
Live Chat with
Elliott and Roger on Aug. 31, 2020
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