(by Curtis Hesler, editor The Professional Timing Service
) There will be short term anomalies in oil prices; but long term, the world's appetite will increase as supply decreases.
There is an acceleration phase coming in these markets that will be suddenly set off by a surprise incident. The time to invest for that eventuality is during market weakness when fear is the ruling emotion.
My favorite major is Apache Corp. (NYSE: APA)
. The stock is trading under our downside buy price of $95.00, and there should be some support at $80. If you are going to own a major oil producer, Apache is the one.
I also like the Canadian producers. America is going to become more dependent on Canadian sources as the Gulf spill hampers further progress at developing domestic reserves. Enerplus (NYSE: ERF)
has been trading around our buy price of $23.00 for several months.
The monthly dividend is 10%, and it has been steady. I think the reason for Enerplus' lethargic action is their stake in natural gas, which makes up about 50% of their production. Enerplus also has some play in the Bakken area, and that will become a more important energy source to the U.S. in the future. Schlumberger (NYSE: SLB)
is off from a high of $74.00 in April due to sympathy selling around the Gulf oil problem. If drilling is halted in the Gulf, it will certainly have a negative impact on Schlumberger, but I just don't see that being a long term issue.
Drilling will eventually resume, and any shortfall created by a moratorium on drilling in the Gulf will be made up by drilling somewhere else. It is time to put in a bid on Schlumberger at $45.00. That would be a splendid bargain.Blackrock Energy and Resources Trust (NYSE: BGR)
has fallen back with the weakness in the market and is trading under our downside buy price of $23.00.
This is a more encompassing play on energy and other natural resources than our other energy stocks, but the dividend is good at 7.5% - and I like the diversification.
BGR could drop under $20.00 if you are interested in adding to positions. Just be sure to limit purchases to $23.00 or less.
I am adding another old friend to the list this month - Kinder Morgan Energy Partners (NYSE: KMP)
. They are in the pipeline and energy storage business. Buy $60 or better; that will give you a 7% dividend.
Before you jump in, this is a limited partnership. You will be a partner, and this will complicate your tax filing somewhat. The "dividend" is actually a distribution of partnership profits, and some of this will be tax-sheltered.
They will send you a K-1 each year with a breakdown of earnings distributions and other tax information. You might want to discuss this with your accountant if the extra filing work is a problem for you. I think the extra effort is worth it as the dividend has consistently risen over time.