THIS MONTH’S ISSUE
4 Trends to Shape Energy Returns for the Rest of 2023
Six months ago, in the November 29, 2022 issue of Energy & Income Advisor “Energy Stocks Soar Again: Now’s the Time to Makes a Few Moves,” we performed a comprehensive rebalancing of our Model Portfolio. At the time, energy stocks were in rally mode with the S&P 500 Energy Index up 73.9% in the preceding 12 months, strength rendered even more impressive relative to the S&P 500’s 11.9% tumble and the Nasdaq 100’s 28.1% decline over the same period. The gist of our call back then: While the outlook for energy commodities and stocks remained bullish over the intermediate term, there was growing risk of a correction as energy stocks aren’t immune to a global economic slowdown. In response, we reduced risk by shifting the portfolio to a more defensive allocation and raised cash. That move proved prescient as the S&P 500 Energy Index is down about 11.1% since that time including almost 9% year-to-date through last Friday’s close. Energy stocks soared more than 65% in 2022, the best-performing sector in the S&P 500 last year by far, besting the S&P 500’s 18.1% decline by more than 83 percentage points. So far this year, the group is the worst in ...
Live Chat
with Elliott Gue and Roger ConradOn 06/29/2023
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 ...
Earnings Recap: Here’s What You Need to Know
In the previous issue, we highlighted Q1 results and guidance for two early reporters: Global services firm Baker Hughes Co (NYSE: BKR) and diversified North American midstream company Kinder Morgan Inc (NYSE: KMI). Here’s how the rest of the Model Portfolio and High Yield Energy List companies fared and our updated advice for each: • Black Stone Minerals LP (NYSE: BSM)—Buy<14 The natural gas-weighted mineral and royalty production trust posted Q1 distributable cash flow of 50 cents per share. That was -17 percent lower than in Q4 but up more than 13 percent from a year earlier. Dividend coverage was ...
Magellan Gets an Offer: Here’s What it Means for Midstream
Midstream energy M&A entered a new stage this past weekend: ONEOK Inc (NYSE: OKE) offered $25 in cash and 0.667 of its own shares for Magellan Midstream Partners (NYSE: MMP). In the first couple years of this energy upcycle, we’ve seen a handful of deals in the midstream sector. These are the steady companies on the energy value chain operating between the wellhead to the end user—transporting, gathering, processing and storing oil, natural gas, natural gas liquids and refined products. Up to now, midstream acquisitions this cycle have been mostly one-sided affairs, for example Shell Plc’s (NYSE: SHEL) take under ...
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.
