8 Undervalued Energy Picks That Can Shine Even With Cheap Oil
Times have changed in the oil patch when $50-a-barrel oil looks good. Three years ago, crude traded for more than $100, but early last year it fetched less than $30. The consensus among the energy experts Barron’s recently convened is that oil, now around $50, will rise to $55 or $60 by year end.
Barron’s energy pros include John Dowd, manager of the Fidelity Select Energy Portfolio (ticker: FSENX), up 21% in the past year; Stewart Glickman, an oil and gas analyst for CFRA, an independent energy research firm; Libby Toudouze, a portfolio manager at Cushing Asset Management and a specialist in master limited partnerships; and Marcus McGregor, an MLP equity strategist at Conning, an institutional asset manager and research firm. Energy infrastructure, including tax-advantaged MLPs, is the best-performing group this year in the energy sector.
Our panelists share a middling near-term outlook for oil prices, but have plenty of ideas about how to profit from energy innovation, even if oil prices don’t rise much soon. Their favorite investments include master limited partnerships, such as Enterprise Products Partners (EPD) and Williams Partners (WPZ), which could prosper as oil and natural gas production, if not prices, climbs. There are also potential winners in more challenged sectors—among them, producer EOG Resources (EOG) and oilfield service provider Baker Hughes (BHI), which can harness technology to boost production.
Barron’s: Let’s start with the big question: Oil is trading below where it started the year. Where is it headed?
Written by Amey Stone