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  • Roger S. Conrad

Energy Bull Market: Positioning for the Next Phase

By Roger S. Conrad on Apr. 1, 2021

The nearly five-month long rally in energy stocks has taken a well-earned pause.

After racing to a nearly 90 percent return since Halloween 2020, the diversified S&P 500 Energy Sector Index has backed off a little less than 7 percent from the 52-week high. The midstream focused Alerian MLP Index has given back about 5 percent of its nearly 60 percent jump. And the S&P Oil & Gas Exploration Index is off about 6 percent after a more than 120 percent leap.

Despite their gains the past few months, many energy stocks up and down the value chain still trade in a lower range than they did the last time crude oil held above $50 a barrel, or natural gas was at $2 per million British Thermal Units for an extended period. And share prices are well below levels typical of the last time we saw $60 oil or $2.50 gas.

We think this indicates investors are still too bearish on this sector. And that’s a very good sign what’s happening now will be the pause that refreshes what’s already been a compelling move off last year’s lows.

Bottom line, we’re still in the early innings of an energy stock rally that’s yet to spread much beyond the largest blue chip names. And that makes now a good time to consider our capital allocation strategy for the sector, which we highlight in the Portfolio discussion.

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  • Portfolios & Ratings

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      Balanced portfolios of energy stocks for aggressive and conservative investors.

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      Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.

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      Our assessment of every energy-related master limited partnership.

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    Experts

    • Elliott H. Gue

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Roger S. Conrad

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor