THIS MONTH’S ISSUE
Lower Energy Stock Prices = Opportunity for Patient Investors
In mid-March, benchmark North American natural gas prices hit their highest point since late 2022. The Alerian MLP Index had set one new record after another. And the price of West Texas Intermediate crude oil was holding over $70 a barrel. The main challenge then was energy stock prices had in our view temporarily out-run their prospects: When the March issue of EIA went to post, more than half our Model Portfolio recommendations were trading above buy prices—shown in the “Rating” column of our table. The past few weeks have been a testament to the power of patience in investing. Even uranium miner and the 50 percent owner of Westinghouse Cameco Corp (TSX: CCO, NYSE: CCJ) is back around our buy price, after trading 50 percent above it late last year. It’s a fair assumption that April’s events have definitely convinced some investors that the energy upcycle is done—and that energy stocks are no longer the place to be. But it shouldn’t surprise anyone that we see things a little differently. In this issue, we share our views of the energy sector’s recent drop, the key catalysts for it and how it is and isn’t affecting our strategy for building...
Live Chat
with Elliott Gue and Roger ConradOn 04/30/2025
Early Energy Q1 Returns: Shale Discipline in Force
Four Energy and Income Advisor Model Portfolio companies have now released Q1 results and updated guidance: Services companies Baker Hughes (NYSE; BKR) and SLB Ltd (NYSE: SLB), energy midstream Kinder Morgan Inc (NYSE: KMI) and Valero Energy (NYSE: VLO). Here are highlights. Expect full coverage of all Model Portfolio and High Yield Energy List recommendations in the May issue of EIA. The most important takeaway is all four companies are still on track to meet or beat their initial 2025 earnings guidance, after reporting solid Q1 results. That’s despite some notable headwinds, particularly softer than anticipated commodity prices. Baker Hughes...
Energy Pullback Roundtable
Editors’ note: When investment markets move as much as they have recently, it’s always important to review and reassess outlook and strategy. Last week, we sat down together for that purpose. The following Q&A has the highlights.—EG, RC Q. Has anything happened this year to change your view that energy and energy stocks are in a long-term super cycle, with investor returns headed much higher in coming years? EG: Nothing has changed in my outlook for the super cycle. Super cycles are multi-year in nature. For example, the last big super cycle in oil and energy stocks started in...
Lower Energy Prices Raise Risks for Some
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...
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.
