Archive for the ‘CVX’ Category

With Rising Oil Prices, Three Energy Funds to Consider

Monday, April 14th, 2014

NEW YORK (TheStreet) -- Energy stocks have been rallying lately on rising oil prices. So far his year, energy mutual funds have returned 3.9%, while the S&P 500 has lost 1.2%, according to Morningstar. A barrel of West Texas Intermediate crude sells for $103, up from $88 a year ago. Can the energy stocks stay afloat? Some fund managers think so. "Oil prices will stay high because there is resurgence in demand from Europe and other areas," says Brian Hicks, portfolio manager of U.S. Global Investors Global Resources Fund. Despite their recent upturn, energy stocks remain cheap, portfolio managers say. While the price-earnings ratio of the S&P 500 climbed in recent years, energy multiples trailed. During the three years ended in 2013, energy funds returned 5.7% annually, compared with 16.2% for the S&P 500. Leading blue chips, such as Chevron and Exxon Mobil command price-to-earnings ratios of 13 or less, compared with 18 for the S&P 500. Fund portfolio managers say that the energy stocks lagged in recent years because investors worried about softening oil prices. According to energy bears, markets seemed poised to face oversupplies as U.S. shale production rose. At the same time, demand was likely to remain stagnant as global economies struggled. But the excess supplies never materialized because of production slowdowns in foreign fields, including the North Sea and Iran. As a result, oil prices stayed firm. To bet that demand will remain healthy, consider an energy fund. Top choices include Fidelity Select Energy Portfolio and Ivy Energy Fund. For a broader portfolio, consider U.S. Global Investors Global Resources, a natural-resources fund that holds mining and precious metals along with energy. Fidelity portfolio manager John Dowd holds a mix that includes fast-growing smaller companies as well as some lumbering giants that may be undervalued. During the past five years, the fund returned 16% annually, outperforming 87% of its peers. Dowd holds some companies that are growing rapidly by exploiting shale fields. He is particularly keen on developers that have reduced costs through trial and error. "The companies that have figured out how to improve productivity are reporting better earnings growth than the industry overall," he says. One holding is EOG Resources, which produces oil and gas in the Marcellus Shale of Pennsylvania and the Permian Basin in Texas. EOG's return on equity has improved as the well costs declined. Another holding is Anadarko Petroleum. Besides working in U.S. shale fields, the company has proved to be an efficient operator in deepwater. Ivy Energy aims to overweight companies that seem poised to record strong growth. During the past five years, the fund returned 15.3% annually, outperforming 73% of its peers. Portfolio manager David Ginther favors companies that own pipelines and storage systems that service the gas shale fields. He says demand will grow as more manufacturers shift to low-cost gas. "We will need more pipelines and more ways to process gas," he says. One holding is MarkWest Energy Partners, a master limited partnership that operates storage and processing facilities in the Marcellus Shale. Its dividend yield is 5.4%. U.S. Global Investors Global Resources has about half its assets in energy stocks. Hicks, the portfolio manager, favors exploration and production companies that can grow rapidly. He looks for businesses that have the most promising acreage and lowest costs. One holding is Continental Resources, a leading producer in the Bakken formation of North Dakota. "They should increase production at a rapid clip over the next three years," Hicks says. Another holding is oil services giant Halliburton. The company assists drillers that are using hydraulic fracturing to develop shale fields. At the time of publication, the author held no positions in any of the stocks mentioned. Follow @StanLuxenberg // 0;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src="//platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); // ]]> This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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Oil Inventories Reach Highest Level Since November

Wednesday, March 26th, 2014
The Energy Information Agency reports crude oil inventories build by 6.6 million barrels in the latest week -- a much larger-than-expected build.

Oil and Natural Gas Markets Won’t Freeze Up If Crimea Splits

Friday, March 14th, 2014
MLV managing director Michael Peterson says exporting liquefied natural gas to Europe from the U.S. requires huge company capital investment.

Investor Movement Index: Home Gamers Added to Technology Stocks

Monday, March 10th, 2014
TD Ameritrade's Investor Movement Index (IMX) indicates clients added to technology names such as Google, Facebook and Twitter, while Apple shares were sold.

Energy Sector Exposed to China’s Social Tender Box

Thursday, March 6th, 2014
American Enterprise Institute's Nicholas Eberstadt says rural to urban migration and the unpredictability of social forces will deeply influence the energy industry in China.

Dissecting This Year’s Struggling Dow

Thursday, March 6th, 2014

NEW YORK (FMD Capital Management) -- The Dow Jones Industrial Average is one of the oldest blue-chip indexes in existence. This bellwether has survived for over 100 years as a time-tested indicator of mega-cap stock performance. Nearly every investor can easily relate to the name recognition that the DJIA inspires, but few can probably name more than a handful of the 30 stocks that it tracks. The index constituents have changed dramatically over the years as new companies are admitted to replace aging monoliths. The underlying stocks are no longer solely focused in the industrial arena, but instead represent nearly every sector of the economy. These shakeups can be attributed to technology advancement, social trends, stock value changes and a host of other characteristics. However, the one constant is that the index is weighted according to the price of the underlying stocks as opposed to market capitalization or other fundamental qualities. That means Visa , with a share price of $223, has a larger weighting than Exxon Mobil , which is currently trading around $94. The fact that Exxon has a market capitalization that is nearly three times larger than Visa is completely ignored when the index is calculated. Because of these anomalies, many contemporary investors have dismissed the Dow as an aging relic in the age of cutting-edge index formulation methodology. In addition, the relatively small subset of just 30 stocks makes it hard to justify as a true sample of the market machinations on a daily basis. While those arguments may be valid, I believe the Dow does still have some merit in modern investing practice and can be a valuable tool to extrapolate data. The largest exchange-traded fund that tracks this index is the SPDR Dow Jones Industrial Average ETF , which currently controls $11.6 billion. DIA charges an expense ratio of 0.17% and curiously pays a monthly dividend yield, which is rare for an equity-oriented ETF. As you can see on the chart above, DIA has significantly underperformed high-beta sectors such as the iShares Russell 2000 ETF and PowerShares QQQ , which have both broken out to new highs this week. The hot money is all chasing growth stocks that offer the potential for superior price appreciation. This is indicative of a fully engaged bull market that is seeing money shift away from larger established companies. Over the last 52 weeks, QQQ has nearly double the performance of DIA. When you dive deeper into the underlying components of DIA, you can get a feel for exactly which areas are dragging it down. Energy has been weak with Chevron and Exxon failing to build any kind of momentum. In addition, consumer staples stocks such as Procter & Gamble and Wal-Mart have been moving mostly sideways for the last year, while the broader market has rallied. Even a stock that is as beloved as McDonald's has been slowly bleeding lower since it peaked in at the beginning of 2013. The flip side is that the stocks that are seeing the most strength are industrials, consumer discretionary names and technology companies. I think that this picture of sector strength and weakness confirms a rotation away from defensive names and into higher risk areas of the market. If we started to see a pickup in volatility similar to the correction we experienced in 2011, then DIA would likely outperform as money migrates back to a more defensive posture. The total return of DIA in 2011 was 8.05%, while IWM and QQQ posted returns of -4.43% and 3.47% respectively. Larger companies are often times seen as safer stocks during periods of prolonged price decline. The bottom line is that I don't think you can entirely write off the Dow as a piece of history. Instead, it can be used as an important gauge of the strength of large companies during periods of exuberance and pessimism. In addition, it provides a long-term historical frame of reference from which we can look back at decades of market price data that tells a colorful story. At the time of publication the author had no position in any of the stocks mentioned. Follow @fabiancapital // 0;if(!d.getElementById(id)){js=d.createElements);js.id=id;js.src="//platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); // ]]> This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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Senate’s Murkowski Says Russia Using Energy Assets as Political Lever

Wednesday, March 5th, 2014
Sen. Lisa Murkowski says Russia's movement into Ukraine demonstrates how Russia has used its energy assets as a political lever.

Senate’s Murkowski Says Lifting Oil Export Ban Won’t Cause Volatility

Tuesday, March 4th, 2014
Sen. Lisa Murkowski (R., Alaska) tells TheStreet's Joe Deaux in Houston she doesn't believe lifting the ban on U.S. oil exports will trigger spikes in energy prices.

Crude Inventories Move Sideways, Nat Gas March Contract Expires

Wednesday, February 26th, 2014
Crude inventories built by 100,000 barrels in the latest week, according to the EIA Petroleum Status Report.

Why Nat Gas Prices Are Sustainable at Current Levels

Wednesday, February 19th, 2014
Natural gas prices hit fresh highs as traders focus on a chilly forecast but there may be more to the story.