I spent much of last week
telling Daily Profit that oil prices were set to rally. Oil prices found
a bottom on Tuesday June 8 at $70 a barrel. Oil briefly crested $76 and
finished the week at $74.48.
Today, oil prices are once
again pushing toward $76 a barrel. But even better, some of the oil stocks in Energy
World Profits posted 10%-15% gains last week. And that’s probably
just the beginning of the gains for land-based oil stocks.
I’ve also been commenting on
the recent supply/demand forecasts from the Energy Information Agency (EIA).
I’m still perplexed at why the media hasn’t latched onto this story. Because significantly
lower supply, and incrementally higher demand, brings us closer to the point
where supply and demand will be in balance.
In fact, according to the
EIA, that point could come in the next 3 or 4 years.
This should be alarming
news. Again, I don’t know why it’s not being reported more aggressively. But at
least the lull gives investors time to buy oil stocks.
Oil is also one of the purest measures of economic expectations. And that’s
what oil prices have been trading on lately. For the entire month of May, all
we heard was how the European debt problems would spread and lead to slower
growth around the world.
Oil sold off sharply.
Now, global growth is once
again back on track, and oil is rallying. It looks like we may see oil at $78 a
barrel by the end of the week. Though I’ll admit, I won’t be worried if oil
doesn’t hit $78 this week. And if oil drops back to $70, it will just mean
better entry prices.
Oil is a
“no-brainer”investment. And I especially like land-based producers in either the
U.S. or Canada. These oil stocks will have the least political risk
of any oil stocks in the world. It hasn’t happened yet, and it may not for a
few years, but there will come a time when oil-producing countries realize that
selling there oil to the highest bidder is bad move. It will make more sense to
keep their domestic oil supplies to themselves to fuel their own growth.
As oil prices rise, investors will also want to consider
alternative energy stocks. There will be a time when there’s simply no choice
but to accelerate the build-out of solar and wind power generation. And the U.S. is behind in recognizing, and actively promoting,
Right now, Germany is the global leader in solar energy adoption. To
put things in perspective, last year, the U.S. added approximately as 485 megawatts of solar
powered energy capacity. Germany, Italy and the Czech Republic combined added 4 gigawatts. That’s nearly 10 times
what the U.S. did.
In all, Europe accounts for 75% of the solar energy market.
Over the last 15 years,
global solar growth averaged 31% a year. Last year, solar growth in the U.S. grew at 36%. So our rate of adoption is improving,
but there’s a long way to go.
No energy portfolio should be without solar.
It’s not the money-losing emerging technology it used to be. Solar companies
are profitable, and will be even if Europe cuts
subsidies. In fact, the solar stock in the Energy
World Profits portfolio is currently trading with a forward P/E of
just 6. it could be a good time to buy it.