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Part I: Top Ten Energy Stocks You Should Own

Part I: Top Ten Energy Stocks You Should Own

clean-energy-stock-tradingAcross the board, 2013 has already been a strong year for oil and natural gas companies and we’re only five months into the year! What we have seen is that many of these oil and natural gas stocks have already made double digit gains on the year alone. This is one of the main reasons we have decided to focus this week on getting you invested in the right energy stocks. When it comes to energy stocks, all we have been seeing is huge gains across the board and that’s why we believe this is a great time to invest in the energy sector. More importantly, we believe American based energy companies are set to produce some of the biggest returns over the next few years as there is a lot of speculation that we are entering an American Energy Boom that will propel these stocks higher.

Throughout the week, we are going to be focusing the majority of our articles on the energy sector and the best ways to invest within that sector. The article you are about to read right now is the first part to a two part article series where we will be offering our 10 Favorite Energy Stocks. Below are our first five energy stocks:

Halliburton (NYSE: HAL) Projections: +57.2%

images-3A little over 19 months ago, we first recommended investors to BUY Halliburton as we saw it as a strong long-term investment. During those long 18 months, we unfortunately have nothing to show for it as shares are now trading at the same levels of where they were when we first initially invested. Our timing for HAL was originally wrong as we invested at the wrong moment as shares fell over 40% in the first 9 months due to falling oil prices and overall weakness in our global economy. Since then however, HAL has recovered quite nicely as shares are up +27% over the past 6 months and up +40% over the course of the past year as share prices are now back to where they were when we first initially invested. Fundamentally we still like Halliburton for all the same reasons, read our original article to find out more details.

Halliburton (NYSE: HAL) Poised to Pop: Good Times Ahead 

Going forward, HAL’s outlook is very bullish with 91% of analysts covering HAL issuing a BUY rating or higher. Overall there are 32 analysts currently covering HAL and all but 3 think it’s a great BUY opportunity. If that doesn’t make you feel comfortable then maybe this will, HAL is represented in the equity portfolio of Soros Fund Management who holds a $34 million stake.

2013 has been a good year for HAL investors for several reasons. For one, HAL’s share price has appreciated +18% year-to-date, secondly in February Halliburton announced a +39% increase in its quarterly dividend to $0.125 per share, and finally in its most recent quarter (Q1 2013), the oil and gas E&P play reported a record $7.0 billion. Halliburton’s management has stated that it’s focused on improving North American margins in the intermediate-term and we have no reason to doubt that they won’t accomplish this goal, as historically they have always been one of the most efficient management teams worldwide. If you’re looking from George Soros point of view, he might see HAL as the best way to play America’s energy boom.

Halliburton’s strength in the tight oil and gas space is underrated. Trading at 10.7 times forward earnings, HAL is cheap especially compared to its peers. Going forward we are very optimistic about HAL’s long-term outlook and believe that the company will continue to outperform against their competition and we believe they will position themselves as the leader of the American energy boom. As a result, we believe shares of HAL will be trading at $65 per-share 12-months from now which included with their annual dividend of 1.20% works out to be a total net yield of +57.2%.

Rex Energy (NYSE: REXX) Projections: +21%

oil-stocks330Rex Energy has been a favorite of ours along with being one of our top-performing stock picks for both 2012 and 2013. We first recommended REXX as a strong BUY opportunity around a year ago. In that short time period, shares have soared over +78%. This probably lead to many investors to sell off their whole position thinking that the stock couldn’t rise any higher without however actually reanalyzing the company’s past and future performance, long-term projections, and overall outlook to see if there in fact is more potential still there. We did in fact take the time to reanalyze REXX and what we found was that while it had been a great year there was nothing to suggest that this run would stop or that REXX would lose value going forward. In fact, many key indicators led us to continue to be bullish on REXX. We did however sell half of our position recommending our readers to do the same as in case of a market correction it would protect our portfolio allowing us to play with the houses money rather than still having all our original starting capital at risk. To find out why we like REXX going forward simply click on the LINK below:

After A Successful Rally, Rex Energy Is Ready To Soar Even Higher

Going forward we expect REXX to continue to outperform their peers and have placed a 12-month price target of $20 per share, a total net yield of +21%.

Range Resources (NYSE: RRC) Projections: +27%

Natural-Gas-StationRange Resources stock price has steadily climbed throughout the past year as shares are up +21% year-to-date and +38% over the course of the past 12 months. Going forward, there is nothing to doubt that RRC won’t continue to rise higher as the company foresees production to grow between 20% to 25% over the course of the next few years. RRC’s total resource potential is estimated to be anywhere between 50 to 70 trillion cubic feet equivalent of natural gas. Being a low-cost producer, RRC should yield exceptional profits from these upbeat production numbers.

We also believe that RRC’s new strategy and focus on per-share growth instead of focusing on growth at all costs will be a big driving force for the company going forward and we believe it will be a key factor in sending share prices even higher. With increased production and exports expected to continue to grow there is little to suggest that Range Resource’s stock won’t stop continuing to steadily rise higher. In fact, we think RRC will be a big winner going forward and we expect shares prices to hit $95 over the course of the next 12 months, a total yield of +27%.

Southwestern Energy (NYSE: SWN) Projections: +40%

saupload_oil_stock330Southwestern Energy has made some key recent capital investments that we believe will only further strengthen the company’s long-term outlook as well as sending share prices significantly higher. SWN recently doubled down on its Marcellus acreage, purchasing 162,000 acres from Chesapeake Energy for $93 million. Being the discoverer of the Marcellus play, SWN made the most of its first-mover advantage as they have continued to improve their operations within the acreage. This strategic investment has greatly strengthened SWN’s overall outlook going forward leading to an increase in their overall projections across the board.

Even as SWN expands, the bulk of their assets are still in the Fayetteville Shale. SWN’s strategic capital investments have been crucial providing the company with a low-cost structure that will help SWN profit even if gas prices were to fall or weaken. Shares of SWN rose +37% over the course of the past year, to many investors that is a great return but when you dig deeper and see the long-term potential you realize that SWN is just getting started. The combination of both SWN’s smart and strategic investments along with their luck in what they discovered has led to increased optimism on SWN’s overall long-term outlook. These findings have also led to many analysts across Wall Street upping their projections adding an additional +30% upside to SWN from current levels.  The biggest news of all might be that SWN’s recent acquisitions has led to them becoming a new position in the hedge fund managed by George Soros, the fund disclosed a $16.7 million position in Southwestern Energy.

Following a strong first quarter where SWN posted an annual increase in production of 11% along with earnings of $0.36 per share versus $0.30 EPS just a year ago representing solid growth. Add in the recent developments, acquisitions, and investments and SWN has become a much more interesting play and one that holds a lot more potential and value now going forward. We project shares of SWN to be trading at $52 per-share 12-months from now, a total net yield of +40%.

Ultra Petroleum Corp (NYSE: UPL) Projections: +63%

images-2Just like RRC, Ultra Petroleum is another low-cost producer utilizing a new strategy to increase overall future production. UPL are now using their cost position to focus on profitable growth. UPL has cut back its capital program to make sure they invest within their cash flow. In doing so, they were able to trim off more than a billion dollars from their capital plans for this year alone. Going forward, the company will have the ability to spend more capital as cash flow increases. UPL’s management team has chosen this strategy to keep the business more efficient and cash flow positive. They want to avoid the possibility of any possible cash flow problems going forward and this new strategy will allow for them to stay within their means and only spend what they can afford to.

UPL has robust projections when it comes to future production, as they believe that by 2016 they can grow their production by 42% while their EBITDA will more than double. These conservative projections only assume a minimal rise in natural gas prices, however it’s very likely that the price of natural gas will rise above the $4.50 price that Ultra is modeling it to be by 2016. If this is true and natural gas prices do rise higher, then UPL will easily exceed their projections benefiting the business in many different positive ways. For one, higher natural gas prices will lead to an increase in both total revenue and overall profit for UPL. In turn, this will lead to higher cash flow numbers giving UPL more capital to reinvest back within the business which will only further promote increased growth and production. In turn, all of these added benefits will lead to a stronger long-term outlook for UPL, leading them to beat all future earnings estimates which will only further propel the stock to rise higher and higher.

UPL is already having a strong year in 2013, as share prices are up +28% year-to-date. Going forward, we firmly believe that UPL will be a quick riser and we project shares to be trading at $37 per-share 12 months from now, a total net yield of +63%.

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Natural Gas Stocks Finally Receiving the Love they Deserve

Natural Gas Stocks Finally Receiving the Love they Deserve

Natural Gas has received no love from investors, Washington, etc. Well all that’s about to change thanks to the one and only $325+ Billion enterprise, ExxonNatural_Gas_facility.resize Mobile. With the acquisition of one of the largest U.S. Natural Gas producers, XTO Energy, finally Natural Gas stocks are getting the love they deserve and as a result we have seen the stock prices shoot up 10%+ this week alone. So for those of you who hated on Natural Gas for the longest time, maybe its time your perceptions will change? Lets first look at what you missed out on.

I first recommended Natural Gas on September 25th. I didn’t just push it, I said I love it. In fact here is the exact quote:

“I know last week I advised buying oil stocks. I still love oil especially for the year of 2010 yet forgo those trades at first to jump on Natural Gas as the gains will be significantly better. As a result here are the main Natural Gas stocks you should look at buying. Chesapeake (CHK), Apache (APA), Andarko (APC), Devon Energy (DVN), XTO Energy (XTO), Rage Resources (RRC), and United States Natural Gas Fund (UNG). Trust me this is a play you don’t want to miss. If you don’t believe me, believe other investors by watching this clip.”

My favorite individual Natural Gas stock has been, EOG Resources, which is up 20% since I wrote my initial research report. Back then I said:

“EOG is a Blue Chip stock that everyone should buy. There is no reason to not like this stock as it is well positioned in a strong, growing sector. EOG is right now trading at $78. I would recommend buying it ASAP. My 12-month price target is $105.”

95624-004-377D1817Currently EOG is trading at roughly around $94, give or take. Nice little profits in 3 months. The thing is I have no doubt that these stocks will not continue to rise and this is why:

I see a huge valuation error in Natural Gas, which leads to a bullish opportunity for this commodity. The collapse of our global economy and the unfolding credit crunch sent natural gas prices spiraling downwards to 10-year lows back in September hitting $2.41/MMBtu. Throughout the year Natural Gas prices have been in the doldrums as it has been almost forgotten all together whereas other commodities, most notably Oil have been skyrocketing. The fact is the fundamentals have been screaming BUY, BUY, BUY yet very few people are listening, until now. I see this acquisition creating a buzz around the commodity leading to a new rush to buy up Natural Gas assets. Look at it this way, Exxon Mobile, the largest oil company in the world and steadily one of the most successful companies year in year out invested over $31 billion to buy XTO along with shouldering the $10 billion in debt XTO had. On a money stand point alone; no one would have improved this kind of investment unless they saw strong long-term benefits. Don’t trust Exxon’s judgment? Then maybe I can help.

Natural Gas: Clean, Quality, Cheap, Domestic, & Abundant

Natural Gas is a clean, quality energy that is cheap and domestic. Natural Gas is the second most abundant fossil fuel in America. It’s estimated that we have upwards of 100 years of Natural Gas usage. Plus if you add Canada into the equation who is the largest holder of Natural Gas then combined we are the Mecca of Natural Gas. With this surplus we could develop it into the energy of America and tell the Middle East to screw off for holding us hostage to oil for so many years. Its only now that people are finally catching on that Natural Gas is the cleanest of the renewable resources. As of right now, natural gas is used to heatnatural_gas_set_to_change_everything_about_fight_for_energy_independence-720907 homes, cook food, power lights, and fuel the revolutionary new Natural Gas powered vehicles. With the winter season coming up, Natural Gas is a huge play as due to the cold winters people crank up the heating. This is even more important as this is expected to be the coldest winter in the past decade. The next great part about Natural Gas is since it is so cheap its getting huge backing from both the consumer and the government. The government is pushing natural gas as the future energy through tax breaks, stipends, etc. The goal is to make it more centered and help push America off oil and onto Natural Gas. With sustained price levels it has become a strong long-term energy play. The demand side of the equation for Natural Gas is starting to look a lot brighter day-by-day. A weak dollar and a recovering U.S. economy should boost demand from the industrial sector. Natural Gas is far more reliable than other options, solar, wind, etc. Washington’s green initiative will push for cleaner fuel options. The government’s green initiative is also positive for the natural gas, as it is a cleaner fuel option. With increased demands there is no reason to not think that natural gas can maintain a price level of $5 with potential upside around $7-$8.

So how to trade the Natural Gas market?

My favorite natural gas stock is still EOG for numerous amounts of reasons.

1. EOG has a return on capital of 26% well above the peer average

2. EOG is expected to have double digit production growth in 2010

3. EOG is the leader in offshore drilling and has several new plans in play

The list can go on and on. Rarely in life do you get second chances in this case you still have the chance to ride the gains of Natural Gas.

Value in Energy and Construction Stocks

Value in Energy and Construction Stocks

Surveying the markets right now I continue to see strong growth and value in energy and construction/engineering stocks, my two favorite sectors. Assumingoil-companies-campaign-against-climate-change you think oil continues to go higher, in which I do, and then it bodes well for all theses stocks. Companies to focus on in this case are the driller and construction/manufacturing companies working directly with the projection of oil. Right now the market is choppy with high volatility on a daily basis. That means it’s hard to trade without boding the risk of getting burned. In this case I think the best option is to buy on a dip and hold onto these stocks. Take a long-term view, if you are looking to day-trade then pick high beta stocks. The main energy sectors to look at our natural gas and oil and then look at an array of construction and engineering stocks.

Buy Oil, Long-Term it will Continue to Rise

Ever since July I have recommended oil in all my articles. Since then, it has soared higher I continue to see it going up. People are wondering whether supply will go down. I can see no reason why supply would decrease more than 2-5% at max in the next several years. Ultimately people won’t stop using gas, as there are no other cheap alternatives. People want to help the environment and all but not at the expense of their pocketbook especially now a days. Oil has become more of a currency trade as a bet against the dollar. It’s hard to bet the dollar long with the high risk of inflation this makes oil bullish. Need more reasons to buy oil? Here it is:

1. Oil is undervalued, futures continue to rise proving prosperous times.

2. OPEC expects Global Oil Consumption to increase 500,000 barrels a day in 2010

3. Per day Oil Consumption to spring back to 940,000 barrels a day and maybe even as high as 1.4 million barrels a day if demand rebounds

4. Analysts predict higher oil prices will be fueled by a stronger economy and higher global demand in BRIC countries

5. Energy forecasters have regularly made assumptions throughout the past year as the fast-changing economic landscape altered consumption patterns and will send crude oil price high above $145 a barrel

Why I like Oil as a Long-Term Investment?

oil_rigI am bullish about the prospective of the industry leading into 2010, as U.S. consumption is expected to rebound somewhat and consumption in emerging markets is supposed to rebound substantially. While most U.S. based Oil Companies expect profit drops of around 65% in 2009, I see it rebounding over 65% in 2010 and higher based upon higher projected pricing due to improved long-term economic outlook and new project start ups that have helped boost the upstream in the gas and oil volume. The main determinant to the oil recovery is the pace of how our economy continues to rebound. The stronger our economy becomes, the stronger the oil markets become. One large effect by the stagnate economy is the how the global credit crunch is making it hard for many companies to expand. I feel that our economy is slowly stabilizing and as a result the oil boom will start to take off in 2010.

What Oil Stocks to Look at?

Bullish Oil Stocks: Chevron (CVX), Noble (NE), Transocean (RIG, Diamond Offshore Drilling (DO), and Apache (APA).

Natural Gas another Bullish Sector

Moving on I think Natural Gas is another Bullish Energy sector. Natural Gas is a clean, quality energy that is cheap and domestic. Natural Gas is the second most abundant fossil fuel in America. It’s estimated that we have upwards of 100 years of Natural Gas usage. Plus if you add Canada into the equation who is the largest holder of Natural Gas then combined we are the Mecca of Natural Gas. With this surplus we could develop it into the energy of America and tell the Middle East to screw off for holding us hostage to oil for so manynaturalgas years. Its only now that people are finally catching on that Natural Gas is the cleanest of the renewable resources. As of right now, natural gas is used to heat homes, cook food, power lights, and fuel the revolutionary new Natural Gas powered vehicles. With the winter season coming up, Natural Gas is a huge play as due to the cold winters people crank up the heating. This is even more important as this is expected to be the coldest winter in the past decade. The next great part about Natural Gas is since it is so cheap its getting huge backing from both the consumer and the government. The government is pushing natural gas as the future energy through tax breaks, stipends, etc. The goal is to make it more centered and help push America off oil and onto Natural Gas. With sustained price levels it has become a strong long-term energy play. A couple weeks ago I advised buying the following natural gas stocks and since then many are up 10%+. I still think they have great long-term value so here’s some stocks to loom at: Chesapeake (CHK), Andarko (APC), Devon Energy (DVN), XTO Energy (XTO), Rage Resources (RRC), and United States Natural Gas Fund (UNG).

Construction and Engineering Stocks Strong Investments

Finally, the third sector you need to invest in is construction and engineering. Why? In 2010, I foresee the sluggish global economy picking up its pace and an increase in spending on capital projects. In my opinion, China will continue to spend billions on infrastructure to maintain their world dominance. I foresee the Middle East, Africa, and Eastern Europe to pledge billions to the construction of infrastructure projects to energize growth in their developing regions. Finally, I believe Brazil will lead a resurgence in capital spending across the board in Latin America as they prepare for the 2016 Olympics. In 2009, construction equipment orders have kept stable and have Concrete Pour - Loop constructioncontinued to increase due to the large amount of global infrastructure demand. I have no reason to believe that this would not continue to increase throughout 2010. To better the situation, I believe that credit conditions should lighten up allowing for a large amount of delayed construction projects to begin operations again. With recent increases in oil and gas prices, I expect us to see a gradual rebound in oil and gas projects as well. I also anticipate the U.S. to increase its capital spending for highways, tunnels and bridges in 2010 aided by Obama’s $787 billion economic stimulus package and federal/local spending.  Going against these predictions are theories that the global markets will continue to struggle. I disagree, for one we have seen great strides recently in the improved economic forecast. As for the sector itself, most major oil companies have already increased capital spending plans as oil is back over $80 a barrel. In the New Year, I expect capital markets to lighten up allowing more lending to take place. Building off this, acquisitions activity should increase as companies have access to lower borrowing rates and attractive multiples. Overall, we are seeing a resurgence in capital projects, which helps the markets across the board as demand for commodities, and resources will increase. Stocks I like are my three favorite Bucyrus (BUCY), Fluor (FLR), and Foster Wheeler (FWLT).

Invest, Invest, Invest in these sectors. I can’t stress more how bullish these will be long-term and that you will regret missing at this opportunity to buy these value stocks at these low levels. A year from now they will all be up 30%+. Stocks I currently own in this sector are: Fluor (FLR), Foster Wheeler (FWLT), Noble (NE), Chevron (CVX), Bucyrus (BUCY), and EOG Resources (EOG).

Natural Gas: The Real Energy Bull Market

Natural Gas: The Real Energy Bull Market

Natural Gas is the energy of the future of America. Due to this simple reason it is about to become the biggest Bull Market. T. Boone Pickens has been saying itNatural_Gas_facility.resize for quite sometime now and finally the rest of the country is coming around to the idea.

Why is Natural Gas so Great?

Natural Gas is a clean, quality energy that is cheap and domestic. Natural Gas is the second most abundant fossil fuel in America. Its estimated that we have upwards of 100 years of Natural Gas usage. Plus if you add Canada into the equation who is the largest holder of Natural Gas then combined we are the Mecca of Natural Gas. With this surplus we could develop it into the energy of America and tell the Middle East to screw off for holding us hostage to oil for so many years. Its only now that people are finally catching on that Natural Gas is the cleanest of the renewable resources. As of right now, natural gas is used to heat homes, cook food, power lights, and fuel the revolutionary new Natural Gas powered vehicles. With the winter season coming up, Natural Gas is a huge play as due to the cold winters people crank up the heating. This is even more important as this is expected to be the coldest winter in the past decade. The next great part about Natural Gas is since it is so cheap its getting huge backing from both the consumer and the government. The government is pushing natural gas as the future energy through tax breaks, stipends, etc. The goal is to make it more centered and help push America off oil and onto Natural Gas. With sustained price levels it has gasstovevi5become a strong long-term energy play.

How to Play Natural Gas?

I know last week I advised buying oil stocks. I still love oil especially for the year of 2010 yet forgo those trades at first to jump on Natural Gas as the gains will be significantly better. As a result here are the main Natural Gas stocks you should look at buying. Chesapeake (CHK), Apache (APA), Andarko (APC), Devon Energy (DVN), XTO Energy (XTO), Rage Resources (RRC), and United States Natural Gas Fund (UNG). Trust me this is a play you don’t want to miss. If you don’t believe me, believe other investors by watching this clip.