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  • Roger S. Conrad

Time is Running Out to Catch Energy in 2021

By Roger S. Conrad on Sep. 17, 2021

There’s little more than three months left in 2021. And time is rapidly running out for energy-light investors and their advisors to catch up to the sizzling performance of oil and gas stocks.

The S&P 500 Energy Index has returned better than 31 percent year to date, or nearly 12 percentage points more than the S&P 500 as a whole. And oil and gas stocks are even further ahead of the companies conventional wisdom says will replace them: The Invesco Solar ETF (NYSE: TAN) is underwater by -18 percent year-to-date, while the ARK Innovation ETF (NYSE: ARKK) is lower by more than -5 percent.

Our Energy and Income Advisor Model Portfolio and High Yield Energy List have performed better still, with total returns of 32 percent and 37 percent respectively. And despite decidedly conservative dividend policies, roughly a third of our recommendations have raised payouts this year, with zero reducing them.

Despite the magnitude of these returns, prevailing investor sentiment toward oil and gas remains decidedly skeptical. That’s reflected in money managers’ continuing underweighting of energy.

We’re also struck by the fact that leading oil and gas stocks continue to sell at meaningfully lower prices than they did in early 2020. That includes companies that proved their resilience by raising dividends at least once since. And it’s despite the fact that West Texas Intermediate Crude prices ranged $10 to $20 a barrel higher than pre-pandemic levels all summer, while benchmark Henry Hub natural gas is more than twice its price then.

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    • 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