A diverse trio of energy favorites
In this sector with building momentum, investors should look at a closed-end fund, a Canadian stock and a major oil producer.
There are positive messages coming from my work in crude oil. I am still looking for new, all-time highs -- certainly by the end of next year.
Here's a look at a favorite closed-end energy fund, a Canada-based Bakken play and what I believe is the only major oil producer you should own:
Blackrock Energy and Resources (BGR) is a closed-end fund that is diversified a bit beyond the oil sector.
The fund's largest holding is in coal. However, BGR offers you a broad commodity-advantaged approach with a yield currently indicated at 6.11%.
It is still selling under our buy price of $28. Purchases limited to $28 or less will give you a properly aligned asset position with a respectable yield.
Toronto exchange-listed Crescent Point Energy (CSCTF) is also under its buy price of C$43.
If you are looking for a stake in the Bakken, which has gotten much well-deserved publicity lately, this is an excellent Bakken play with a yield of more than 6.48% at Wednesday's price.
I look for the Canadian dollar to recover well over the U.S. dollar in the years ahead. Strength in the loonie will translate to higher dividends from Canadian stocks when the value is converted to U.S. dollars.
It will also inflate the share prices in U.S. dollar terms. Canadian energy stocks are excellent in providing dividends and are an advantage against the ever-depreciating U.S. currency.
If you want to own a major oil producer, in my opinion there is only one that warrants your consideration: Apache (APA).
The company operates in relatively safe parts of the world and is a master of squeezing production out of old fields. Believe me, the big fields of the past are aging, and production is becoming more difficult.
Apache can recover the last drop, insofar as technology is able. The stock has been trading below our buy price of $110 for the past couple of months.
In my view, Apache is the only major oil company worth owning. We are not going to see it trade below $110 indefinitely.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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