THIS MONTH’S ISSUE
Staying Focused and Tuning Out the Election Noise
Many thanks to our friends who came to see us at this month’s Orlando MoneyShow. Please join us for our live webchat Tuesday afternoon, October 29 starting at 2 pm. Thanks for reading and Happy Halloween!—EG, RC. November US elections are roughly a week away. And few if any sectors are attracting more political noise than energy. Our advice for investors: Tune out as much of the heated rhetoric and breathless campaign promises as you can. And stay focused on what’s important to investment returns. That’s building positions in the companies likely to profit the most from this still very much unfolding energy price cycle. Earlier this month, we presented at the Orlando MoneyShow with a basic message: Energy is a growth industry with peak demand no where in sight and this is an “all of the above world,” where no one energy source is perfect but almost all are set to grow rapidly for years to come. That’s worth keeping in mind as popular investment media fixates on trying to pick winners and losers, based on election forecasts that at this point amount to little more than guesswork. There is one group of energy companies we think will pick...
Live Chat
with Elliott Gue and Roger ConradOn 10/29/2024
Endangered Dividends List
Endangered Dividends List companies are vulnerable for one or more of the following reasons: Cash flow coverage of distributions is inadequate. Elevated debt levels with imminent refinancing needs. Revenue pressure triggered by weakness for at least one key asset. Inability to access the equity market on favorable terms to fund capital spending, forcing management to utilize more internally generated cash flow. Exposure to volatility in commodity margins from either rising or falling prices of raw materials. Aggressive general partners anxious to buy in limited partners’ cash flows at discounted prices. Regulatory reversals. Expiring contracts with little hope for renewals at...
Portfolio Strategy: Early Q3 Reporters, Solid Portents
The first four EIA Portfolio companies to report Q3 results and update guidance are energy services companies Baker Hughes (NYSE: BKR), SLB (NYSE: SLB), midstream Kinder Morgan Inc (NYSE: KMI) and US refining king Valero Energy (NYSE: VLO). Starting with the upstream companies, Baker Hughes’ Q3 earnings handily topped what had been Wall Street consensus estimates, surging 59.5 percent from the year earlier period and 17.5 percent above Q2. The company also generated $754 million in free cash flow, a boost of 27 percent from last year and $545 million after dividends paid. That’s good reason to expect another penny...
Midstream Energy M&A Marches On
Back in January, we highlighted mergers and acquisition activity as a key driver of energy stock returns for 2024. We haven’t been disappointed. Some deals have taken a bit longer to close than companies anticipated. The union of Chesapeake Energy and Southwestern Energy to form Expand Energy (NYSE: EXE), for example, took until October 2, as federal regulators made several extensive requests for information. The Federal Trade Commission did wind up granting anti-trust approval for Chevron Corp’s (NYSE: CVX) proposed acquisition of Hess Corp (NYSE: HES) in late September. The condition was identical to what the FTC imposed on ExxonMobil’s...
Meet Our Editors
Elliott H. Gue
Founder and Chief Analyst
Since earning his bachelor’s and master’s degrees from the University of London, Elliott has dedicated himself to learning the ins and outs of this dynamic sector, scouring trade magazines, attending industry conferences, touring facilities and meeting with management teams.
Roger S. Conrad
Founder and Chief Analyst
Roger S. Conrad has successfully advised income investors since the 1980s, with a nationally acclaimed sector specialty in utilities, telecommunications and energy. He’s a managing partner of Capitalist Times author of Power Hungry, independent director of NYSE-listed Miller Howard High Income Equity Fund and contributing editor to Forbes.com.
