Author: Adam Feik

Solar Stocks Heat Up

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


I wrote about oil refiners – and the phenomenal performance of their stocks – on Monday. Today I'm writing about another energy sector that has been hot the last few weeks; namely, solar stocks.

Let's take First Solar (Nasdaq:FSLR), for example. Here's a stock that's gone from $70/share 6 months ago to $40/share 1 month ago, and now almost back to $60.

FSLR's all-time high is over $300, back in the summer of 2008. The stock spent the rest of '08 crashing, but then stabilized until February 2011, when FSLR peaked around $175 before crashing all the way to $12 in May 2012 (see chart from Yahoo! Finance, below). From that low point, FSLR enjoyed a nice, even, steady uptrend for the next 2 years. On June 20, 2014, when oil peaked at just above $107/barrel, FSLR was trading around $70 per share. FSLR's $30 haircut from June 2014 – January 2015 almost perfectly coincided with oil's big decline. Solar investors, of course, understand that solar becomes a more attractive energy alternative when oil prices are high, and vice versa. Continue reading "Solar Stocks Heat Up" →

Is It Time To Take Profits On Oil Refining Stocks?

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


Does it sound strange to even think about "taking profits" on anything related to energy?

Well, oil refining companies' stocks have enjoyed quite a run this year. Check out this table summarizing recent returns for 5 selected stocks (total returns through 2/20/15, from Morningstar; returns longer than 1 year are annualized; "since Jan. 15" data from Yahoo! Finance):

If you haven't paid attention to this group, how surprised are you to see a group of oil-related stocks with positive returns over the past 12 months – let alone Tesoro's +82% performance?!!

I've also included the 3-, 5-, 10, and 15-year returns, just because they're so remarkable.

Oil down, refiners up!

Of course, the driving reason for this group's stellar 1-year returns is that oil refiners actually benefit from being able to pay lower prices for crude oil, which is the primary raw material used to make their refined products, such as gasoline. Continue reading "Is It Time To Take Profits On Oil Refining Stocks?" →

Pros and Cons of the U.S. Shale Oil Boom (Really?)

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


Ten years ago, who would have imagined this headline?

I remember a comment made almost in passing by a mentor of mine, circa 2005. At the time, oil prices had spiked north of $50 per barrel, which was historically very high, and appeared set to continue rising. Worse, the U.S. – and a large segment of our economy – seemed almost totally dependent upon foreign countries harboring various levels of hostility against us.

Against this backdrop, my mentor said something to this effect: "What the U.S. needs is like another 'Manhattan Project' – only this time, the project would be coming up with a way for our country to become energy independent."

Perhaps you have similar memories of "pre-fracking boom" life in America. Continue reading "Pros and Cons of the U.S. Shale Oil Boom (Really?)" →

The History & Likelihood Of V-shaped Oil Recoveries

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


In recent days, crude oil and natural gas prices have continued to undulate within a range near their lows. What’s next for the commodities, and for the energy companies whose fortunes are joined at the hip of oil and gas?

With producers like Shell, Occidental Petroleum, BP, and ConocoPhillips announcing big-dollar capital spending cuts, will oil’s chart soon be tracing a V-shape?

Will history rhyme?

Phil Flynn presented the following analysis in his article for Futures Magazine yesterday:

“In 12 data points when oil had a break of 40% or more within a year the market rallied back 52.8% within 12 months. Even when the break was only 30% with 20 times the rebound was still a very impressive 45.5% within 12 months. This snap back comes usually as the market realizes that a period of low prices will stimulate demand and cut backs in production will take their toll.”

Richard Hirayama, portfolio manager for WHV Investments, provided a similar perspective – based on calendar years – in his portfolio manager letter this month. Hirayama furnished this nugget: Continue reading "The History & Likelihood Of V-shaped Oil Recoveries" →

How To Manage A Natural Resources Fund When You're Bearish On Natural Resources

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


I wrote a couple weeks ago about whether we're seeing the end of the oil supercycle. In my article, I heavily referenced a money management firm (WHV Investments) that has been bullish on energy investments since predicting a “supercycle” in 2000 (great call at the time!). Despite the massive turmoil since last June, WHV continues to be bullish.

An oil-bullish money manager

To get a flavor for stocks owned by a manager who is bullish on the continuation of the energy supercycle, check out this partial list of WHVIX's stock holdings. Granted, the holdings data are a few weeks old, but WHV tends to have very low turnover and says it’s sticking with its thesis. WHV management believes we’re still in the oil supercycle; accordingly, WHVIX owns stocks like these (as of 12/31/2014, source: WHV.com; this list represents selected stocks rather than a complete Top 10 list):

WHVIX Natural Resources Stock List

* “Bullish signal” refers to whether MarketClub is displaying “green triangles” for both the intermediate - and long-term outlook.

Of the above holdings, WHVIX appears to have (during 4Q 2014) increased its exposure to Suncor, which derives a large plurality of its business from “downstream” refining and marketing activities. Additionally, Suncor has significant development efforts in Canada’s Athabasca oil sands. Continue reading "How To Manage A Natural Resources Fund When You're Bearish On Natural Resources" →