THIS MONTH’S ISSUE
AI Fever, Drill Baby Drill and Earnings
Happy Thanksgiving everyone! Please join us for our live webchat Tuesday afternoon, November 26 starting at 2 pm. Thanks for reading!—EG, RC. The energy sector has caught AI fever. It started with uranium mining stocks: Model portfolio pick Cameco Corp (TSX: CCO, NYSE: CCJ) is up better than 40 percent in the last three months alone. It spread to C-Corp pipeline companies. Long-languishing Kinder Morgan Inc (NYSE: KMI) has soared to its highest price in nearly 10 years. ONEOK Inc (NYSE: OKE)—added to the portfolio with the Magellan Midstream merger last year—is up more than 80 percent since that deal closed. And our natural gas producers are joining in, with newly formed Expand Energy (NYSE: EXE) up nearly 25 percent since the Chesapeake/Southwest Energy merger closed October 1. We believe this rally well deserved and overdue. It’s simply impossible to meet the energy requirements of artificial intelligence-enabled data centers—estimated 22 percent annual growth in electricity demand through 2030—without a lot of natural gas. Provided Inflation Reduction Act tax credits are extended, nuclear power should fill some of the gap. That’s mainly restarts of plants shut in the last 10 years, Three Mile Island 1 in Pennsylvania and...
Live Chat
with Elliott Gue and Roger ConradOn 11/26/2024
Endangered Dividends List: Risk Declines but Quality’s Still King
Endangered Dividends List: Risk Declines but Quality’s Still King 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...
Portfolio Strategy: There’s Strength in the Numbers
Last month, four Energy and Income Advisor Model Portfolio companies reported their Q3 earnings and updated guidance: Energy services companies Baker Hughes (NYSE: BKR) and SLB (NYSE: SLB), midstream Kinder Morgan Inc (NYSE: KMI) and US refining king Valero Energy (NYSE: VLO). Takeaway number one was all four companies are still performing well in an environment of production discipline. Kinder Morgan has since rewarded our long-term patience by surging to a decade high this week. Baker Hughes is now trading at its highest price in nearly 20 years. And shares of SLB and Valero have strengthened as well, though services...
3 Key Takeaways from Q3 Portfolio Results
Our macro commentary this month is highlighted in the Alert we sent November 14 “Drill Baby Drill!” It’s posted on the Energy and Income Advisor website under “Trending Topics.” We strongly advise everyone check out the reasoning and key points. Top of the list: President-elect Trump’s likely policies are not bearish for either energy prices or sector stocks. The main reason is North American shale discipline. The sector today is a far different place than what existed in the previous decade. Ownership from the well to the burner tip has sharply consolidated. And the remaining players are far more concerned...
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.
