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  • Roger S. Conrad

Worst to First: What’s Next for Energy’s Hot Stocks

By Elliott H. Gue on Mar. 12, 2021

After lagging the field the past few years, energy stocks have torn up the track so far in 2021. The S&P 500 Energy Sector Index is up more than 40 percent year to date, and almost 90 percent since results of the November presidential election became clear.

All of our Portfolio and High Yield Energy producers and midstream stocks are up strongly as well. ONEOK Inc (NYSE: OKE) is 90 percent higher since early November. Crestwood Equity Partners (NYSE: CEQP) has nearly doubled and Occidental Petroleum (NYSE: OXY) has more than tripled, to highlight just a few rags to riches stories.

Some of those big gains have been due simply to investors’ realization that the Biden Administration was never going to be the doomsday machine for oil and gas that many feared. And it’s just the latest example of investors losing out by overestimating the importance of politicians to returns.

But by far the most important catalyst for energy returns has been simple economics. Mainly, these stocks were far too heavily discounted for a sector as large and vital to a functioning global economy. And with the pandemic’s depressing impact on demand subsiding and investment cutbacks at long last starting to make a dent on the supply glut, the cycle is moving into its next phase.

In this issue’s feature article, we highlight the view from $60 plus oil, and our forecast for energy prices for the rest of 2021 and beyond. Our long view remains that many energy stocks still have some room to rise before they reflect the full earnings benefits of $50 per barrel oil, let alone the current $60 plus.

Energy & Income Advisor

Your complete guide to energy investing, from growth stocks to high-yielders.

In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.

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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