Like Fine Wines These 4 Energy Stocks Get Better With Age

Post on: 14 Июнь, 2015 No Comment

Like Fine Wines These 4 Energy Stocks Get Better With Age

One oil stock in particular that has really been ripening over the past few years is EOG Resources   ( NYSE: EOG ). The company went from the dregs of Enron to one of the best run oil companies in America. As it aged, the company has steadily grown what matters most to investors: its cash flow, stock price, and dividends.

While the current turmoil in the oil market might make investors want to spit out oil stocks, EOG Resources isn’t going to turn to vinegar and leave you with a bitter taste. This is because the company has a strong balance sheet and is one of the few oil companies that can make money drilling even if oil fell to $40 per barrel. Further, it’s very likely that the company can do even better than that as it historically improves results with maturing shale plays.

Richard Kinder has built a company of nearly 70,000 miles of pipelines, moving oil and gas from production to demand centers. Its business is based on volume, not the market price of oil or gas, and contracts can run a decade in length. Pipelines are expensive to maintain, and new pipelines cost a fortune, but these high costs also make it much harder for competitors to slice out market share. Furthermore, the demand for natural gas is going to continue growing in coming years, as industrial consumption and export capacity increase.

Stick Kinder Morgan in the cellar. There’s a good chance it could be a 1961 Cheval Blanc if you hold on to it long enough.

Maxx ChatskoNextEra Energy   ( NYSE: NEE ) is on a remarkable run of creating shareholder value, and there is no end in sight for the renewable energy powerhouse. Since 2010 the company has increased its dividend 46% while its stock has nearly doubled — and why not? The power generator’s portfolio consists of 52% natural gas, 27% nuclear, and 16% wind, which combine to give it a carbon dioxide emissions rate that is 53% lower than the industry average. While different wine varietals work best with fluctuating levels of carbon dioxide, keeping a low carbon dioxide profile in the case of NextEra Energy will become increasingly advantageous for the company in the years ahead. When peers are looking for ways to mitigate the emissions of their portfolios to meet strict new carbon regulations — perhaps writing off dirtier, older assets — NextEra Energy will simply continue to invest in growth opportunities.

But, hey, it’s 2015. Why own a power generator? After all, thanks to the accessibility of cheap, distributed, and renewable power generation and the growing focus on low-carbon energy, it isn’t so crazy to question the role massive, centralized power plants will play in the future of energy. NextEra Energy took at big leap toward the future by acquiring the utility business   of Hawaiian Electric Industries, which had struggled to cope with the large influx of customers turning to rooftop solar systems. The move allows the company to essentially use Hawaii as a sandbox for futuristic energy technologies.

Consider that investments in grid energy storage systems — capable of smoothing out power distribution throughout the day (when the sun isn’t shining) — and in experimental microgrids are inevitable to successfully accompany rooftop solar. Once the technologies, metering systems, and responsibilities of the utility of the future are proven at scale in Hawaii and the cost of solar becomes more economical in the continental United States, NextEra Energy could roll out its blueprint to all 50 states. What’s not to like about decades of growth potential?

Tyler Crowe : If we are going to make wine references here, then ExxonMobil ( NYSE: XOM ) is definitely a 1961 Chateau Latour. They have both stood the test of time. And — defying traditional logic — they both seem to get better despite so many people saying that they are past their prime. If you are looking for an investment with a shelf life that you can keep in the cellar for decades to build wealth, there are few companies that have the track record that Exxonmobil has. For over 75 years, ExxonMobil has either maintained or grown its dividend thanks to its ability to do one thing that so few other companies in the oil and gas space seem to be able to do: Generate gobs of cash flow .

Just like those vintage bottles of Latour or Mouton-Rothschild, very rarely are you going to find a time when you can buy shares of ExxonMobil at a steep discount. Even with the average price for a barrel of crude down almost 60% since it’s high in June of last year, shares of ExxonMobil have only dropped 14% from their 2014 highs. That doesn’t mean its overpriced, though, because after sitting in your investment cellar for 20 years to 30 years, it will probably look like a great addition to the stock collection.

The backdoor Holy Grail investment into “Oil Boom 2.0

Like Fine Wines These 4 Energy Stocks Get Better With Age

A single, under-the-radar company has its hands tightly wrapped around both the hydraulic fracturing technology and know-how that has allowed this shale boom to take off in the first place . The Motley Fool just completed a brand-new investigative report on this significant investment topic and the company helping fuel its boom. Simply click here for access .

Jason Hall has no position in any stocks mentioned and is not afraid of wine from a box or a bottle with a screw cap. Even if it’s White Zinfandel.

Matt DiLallo  is a teetotaler and instead lightens up on the cream in his coffee when he’s in need of a strong drink.  He   has the following options: short January 2016 $32.5 puts on Kinder Morgan and long January 2016 $32.5 calls on Kinder Morgan.

Maxx Chatsko Maxx really enjoys dark red wines from South Africa and, for the record, has never slapped the bag. He  has no position in any stocks mentioned.

Tyler Crowe has no position in any stocks mentioned and will probably never talk to you again if you say White Zinfandel is a good wine. He and Jason are not on speaking terms right now.

The Motley Fool recommends Kinder Morgan. The Motley Fool owns shares of EOG Resources, and Kinder Morgan. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .


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