It’s easy to make money from a boom in crude oil prices. Just buy the commodity (or one of the exchange traded funds that does it for you), and watch your profits multiply.
When natural gas prices are going up, it’s the same story. Ditto for virtually any other commodity, from corn to soybeans to copper.
But you know why I love select energy stocks these days? Not because I believe crude oil prices are going to hit $200 later this year (though that is certainly possible). And not because I expect to pay $6 a gallon to fill up my tank next week or next month.
It’s because we’re in the midst of a massive, domestic, energy renaissance — a veritable bonanza that doesn’t need exploding prices to line your pockets with dough! Instead, it’s based on an explosion in domestic production, drilling, transportation, storage, and refining that this country hasn’t seen in decades. That makes this boom both more durable, and more rewarding, than any I’ve seen in my career!
|We’re in the midst of a massive, domestic, energy renaissance based on an explosion in domestic production, drilling, transportation, storage, and refining that this country hasn’t seen in decades.|
Look, if you go back to the period from early 2007 to mid-2008, you’ll see an incredible surge in oil prices. Crude futures soared from around $50 to almost $150 amid tight supplies, strong demand, massive speculation, and more.
That caused mega-capitalization oil stocks, like Exxon Mobil (XOM) and Chevron (CVX), to surge. Oil services and drilling rig firms like Transocean (RIG) and Weatherford International (WFT) more than doubled.
But when crude oil prices collapsed to less than $35 in late 2008 and early 2009, so did those stocks. To cite just one example, Weatherford plunged from $50 to less than $8 a share.
The revolution underway in the domestic energy business is completely different though. Consider that crude oil futures were recently trading around $100 — almost exactly where they were three and a half years ago.
Natural gas is going for just under $4 per million British Thermal Units (BTUs). That’s roughly the middle of the $2 to $6 range that gas has spent much of the last five years trading in.
But during that time, several of my favorite domestic energy boom names have doubled, tripled, or more! Take a company like Cimarex Energy (XEC), a $12.9 billion oil and gas firm whose operations are concentrated in some of the new drilling regions where production is booming. Its shares have roughly tripled in the past two years — even as energy prices have mostly gone sideways!
Then there’s the railcar manufacturing and leasing firm that I recommended to my Safe Money Report subscribers last year. It’s cashing in on the boom in the shipment of oil by rail. That boom, in turn, stems from the fact oil and gas is being found in all kinds of new locations that aren’t effectively served by our outdated pipeline infrastructure.
The stock just hit a record high, and my subscribers have more than doubled their money already. But if I’m right about the durability and longevity of this domestic energy bonanza, they should just be getting started!
Bottom line: You can buy the big, household name energy stocks and make money when oil and gas prices surge. There’s nothing wrong with that.
But this is an entirely different kind of energy bull market — one being driven by a massive, domestic renaissance. I’m confident it can continue for years, and hand investors massive amounts of wealth — regardless of whether crude goes for $100, $150, or $200 a barrel!
So stay tuned — I have some fantastic ideas about how you can position yourself to profit from this trend. I’ll be sharing them here in Money and Markets soon.
Until next time,