NYSE: KMP Archive
Kinder Morgan (NYSE: KMP) Beating Cheniere (NYSE: LNG) at its Own Game
by David Fessler, Investment U Senior Analyst
Thursday, March 28, 2013: Issue #2000
The Department of Energy currently has 16 applications on file for companies that want to export liquefied natural gas (LNG). It’s been so overwhelmed with applications it instituted a moratorium on filing them.
And one company is beating all the rest. Now if we’re just talking LNG, most investors would correctly guess Cheniere Energy, Inc. (NYSE: LNG) is in the lead.
But I’m going to tell you a secret about a company that’s beating Cheniere at its own game.
Investors who follow the LNG sector are familiar with Cheniere’s plans to export LNG.
There’s just one problem, and it’s a big one: Cheniere’s Sabine Pass, Louisiana export facilities won’t be ready until 2016 at the earliest.
And the company I’m writing about today is already exporting natural gas.
We’ll get to them in a moment, but first let’s look at the motivation behind wanting to export natural gas in the first place.
It’s no secret that hydro-fracking and horizontal drilling have given the United States a tremendous gift: an estimated 100-year supply of natural gas. America has numerous natural gas shale formations.
To continue reading, please click here...Are U.S. Nuclear Power Plants Going the Way of Coal Plants?
by David Fessler, Investment U Senior Analyst
Tuesday, January 29, 2013: Issue #1958
Last October, Dominion Resources, Inc. (NYSE: D) announced it would be closing its Kewaunee nuclear power plant. Located in Wisconsin, this small, 566-megawatt (MW) unit is the first nuclear plant to succumb to cheap natural gas.
The boom in U.S. shale gas production has natural gas prices at 10-year lows. It’s thrown an interesting curve at the domestic power market. Many utilities are retiring old coal plants in favor of natural gas. Are nuclear plants right behind?
We’ll analyze where the industry is today and where it’s going. First, let’s take a look at coal plants versus natural gas-fired ones.
Many coal-fired power plants in the United States are being retired, in some cases long before the end of their useful lives. How many of the 1,169 currently operating in the United States are on the hit list?
A report from the Union of Concerned Scientists entitled “Ripe for Retirement” identifies 353 of them. Check out the map below.
These plants total 59 gigawatts (GW) of generating capacity. That’s about 18% of the total coal-fired plants in the United States, and 6% of the nation’s total power generation capacity. Most of the plants on the list are older, less efficient and no longer economically viable.
The real problem is that these plants are big polluters. They’d be too expensive to upgrade to meet the latest Environmental Protection Agency’s (EPA) emissions guidelines.
To continue reading, please click here...10 Stocks Not Addicted to QE
by Steve McDonald, Investment U Research
Monday, September 24, 2012
This Week: Apple Does It Again, But… Stocks Aren’t Addicted to QE… and the SITFA (Slap in the Face Award)
Well, it should come as no surprise to anyone who watches this segment that Apple (Nasdaq: AAPL) blew through $700 last week. I was talking about it when it crossed $600 back in July.
But the real news here is that almost no one predicted the amount of demand for the new iPhone. They were selling 25,000 a minute as of last Wednesday.
25,000 a minute!
Alright, this is where reality comes into play…
Most investors who are buying AAPL now are doing so in the hope that they will see a double or some really big number based on the new iPhone. That’s what the hype is saying. But as I said last August, buy on the rumor; sell on the news.
There will be no $1,000 AAPL on this announcement, and forget about $1,200. Someday maybe, but not in the short term.
The fact is that you have a much better chance of seeing bigger returns from beaten-up Seagate Technology (Nasdaq: STX) according to a Barron’s article last week.
To continue reading, please click here...Energy and Commodities: 2011 & 2012
by David Fessler, Investment U Senior Analyst
Wednesday, December 21, 2011
As my colleagues have done earlier this week, I’m now putting myself in the hot seat with regards to my prognostications from a year ago.
Around this time last year, I opined that commodities like gold, silver, fertilizers, coal and oil were in increasingly short supply. Prices for these and other commodities were approaching 10-year highs, and would keep on rising.
How did that statement pan out? Let’s take a look.
Precious Metals
According to data from Kitco, gold started the year around $1,400 per ounce, and is currently trading at just over $1,600 per ounce.
Silver, on the other hand, started the year at $30.70 per ounce, and now trades a tad lower in the $29.50-per-ounce range. It was what silver did during the year that made all the headlines.
Back in April, it hit a high of $48.70 per ounce. The scale and speed of the decline after the April high suggested institutional dumping of the metal. Prior to the sell-off, silver was widely viewed as another safe haven (like gold) against money printing.
Fertilizers
To continue reading, please click here...Energy M&A: The Natural Gas Bulls Are Back in Town
by Justin Dove, Investment U Executive Editor
Tuesday, October 18, 2011
Kinder Morgan’s (NYSE: KMP) $33-billion takeover of El Paso Corp. (NYSE: EP) is just one of a flurry of recent mergers and acquisitions in the energy sector.
Statoil (NYSE: STO) also took over Brigham Exploration (Nasdaq: BEXP) on Monday, and Sinopec (NYSE: SHI) acquired Daylight Energy (OTC: DAYYF.PK) last week.
Dealogic recently released data showing that energy and utility deals account for nearly a third of the dollar value for all worldwide merger and acquisition transactions thus far in the fourth quarter.
This likely means one thing: Companies with a bunch of capital think smaller natural gas companies are attractively cheap right now.
The market is extremely volatile due to fears of world economic crisis. Those fears are especially hard on the energy sector, as a global recession would crush oil and natural gas demand.
The Vanguard Energy ETF (AMEX: VDE) still hasn’t recovered from its sharp drop in August, and is still suffering losses greater than those of the S&P 500. But natural gas stocks have been doing even worse than the broad energy sector. The United States Natural Gas Fund (AMEX: UNG) fell just as far as the Vanguard Energy ETF, but hasn’t rebounded quite as quickly.
As Peter Lynch famously wrote, “Insiders might sell their shares for any number of reasons, but they buy them for only one: They think the stock price is undervalued and will eventually go up.”
And according to Canada’s Insider News and Knowledge (INK) energy indicator, which measures insider sentiment in the sector, insider sentiment in the energy industry is at its highest levels since following the 2008 recession.
To continue reading, please click here...The Best Way to Play the Spike in Home Heating Costs…
by David Fessler, Investment U Senior Analyst
I was up at my hunting and fishing club this weekend enjoying the fall colors. They were at their peak in the Pocono Mountains here in Northeast Pennsylvania.
It was cold enough that the furnace kicked on at night. All three of our buildings are heated with oil. We just topped off our tanks. If you live in the Northeast, you might want to do the same. I’ll get to that in a moment.
Regular readers know I write a lot about factors that will continue to keep an upward bias on the demand for natural gas. Utilities switching old power plants over and building new ones to run on it are a big factor. The increasing use of natural gas as a source of transportation fuel will be, too.
But home heating isn’t something I’ve addressed thus far. However, recent statistics published by the Energy Information Administration point to a big swing away from heating oil towards natural gas.
About 5.7 million households in the Northeast United States use heating oil to keep warm in the winter. Seven years ago, that number was 6.9 million. That’s a decrease of 21 percent.
About half of those 1.2 million people switched to natural gas. Check out the graph below.
The peak of the oil-to-gas switch occurred three years ago, but the EIA is forecasting the changeover to begin rising again this coming winter as oil prices increase.
Why? Because heating oil prices are largely reflective of those for crude.
To continue reading, please click here...The Best Oil and Natural Gas Play in America
by David Fessler, Investment U Senior Analyst
Wednesday, May 4, 2011
Is there one absolute “best play” in the American oil and natural gas sector?
Actually, there is. But you’d probably run through all the major refiners, and a bunch of exploration and production companies, and you still wouldn’t have hit on it.
You see, it’s not some junior E&P company in one of the shale plays, or an equipment company supplying some specialized piece of equipment to deep-water drillers, a big refiner, or one of the majors with billions of barrels in proven reserves.
Sure, there are great companies in all of those sectors. But the company I’m talking about doesn’t drill, explore, or refine oil or natuarl gas. But many of the companies engaged in those businesses are crucially linked to this company, and would be out of business without it.
Every day, it just does the same simple thing, day in and day out. Its income stream is about as predictable as the sun coming up and setting each day. And even though it’s firmly embedded in the oil and gas sectors, its revenue and profits generally continue to rise, regardless of whether oil and gas prices are soaring or dropping like a stone.
You see, this company’s business is all about consistency: doing the same thing over and over and over. Its business model has been the same since it’s been in business, and that’s nearly two decades. In fact, it pioneered the whole concept of the business model it now operates under.
Take a look at the following chart. If you invested in the S&P 500 back in the 1990s, you’d be up about 200 percent right now. Not too bad. But if you had put some money into this company at the same time, you’d be up over 1,200 percent, including reinvested dividends.
What the Libya Crisis Means for Crude Oil Investors
by David Fessler, Investment U Senior Analyst
Wednesday, February 23, 2011
First Tunisia… then Egypt… then on to Bahrain… and now Libya. The political uprisings sweeping across the Middle East have provided the storylines of 2011 so far.
Why all the unrest?
Well, tensions have simmered for years – and the youth of these countries has had enough. For example…
Ominously with Libya, though, Muammar al-Gaddafi’s son, Saif al-Islam Gaddafi, said last weekend that, “Rivers of blood will flow. There will be civil war.”
He was referring to the measures the government is prepared to take to squelch the uprising in cities across the country.
And that was all the world’s major oil companies operating in Libya needed to hear. BP (NYSE: BP) suspended its exploration operations. Statoil (NYSE: STO) closed its offices in Tripoli. And Royal Dutch Shell set employee evacuation plans in motion.
Others are tight-lipped about their contingency plans. But privately, most are already closing offices and evacuating workers and their families. In other words, they’re heading for the exits… and fast. And most companies operating in the southern portion of Libya have their own airstrips.
The question is: What does all this mean for the oil market?
To continue reading, please click here...30 Million Americans Will Have to Move by 2013… Are You One of Them?
by David Fessler, Investment U Senior Analyst
Friday, October 1, 2010
Earlier this week, the rain hammered down for two days straight here in Pennsylvania. But remarkably, rivers, streams and lakes haven’t risen one iota.
And my son, Noah, hasn’t had to mow the lawn in over a month (something he’s not entirely unhappy about.)
Why? We’ve had a bone-dry summer up in the Northeast. But the drought that the Northeast has experienced over the past few months is nothing compared to the situation out west. In a word: desperate…
A River Runs Through It
If you live in any of these seven western states – Colorado, Arizona, Nevada, California, Utah, Wyoming or New Mexico – chances are, you’re dependent on one thing to survive…
The Colorado River.
In fact, there are 30 millions Americans who rely on the great river for their water. It’s the lifeblood of these states. Without the Colorado’s steady flow, life there would cease to exist.
All seven states would struggle to generate power, grow food and people wouldn’t have water for everyday use.
To continue reading, please click here...You’ll Never Believe What Steve Forbes Told Me in the Elevator
by David Fessler, Investment U Senior Analyst
Friday, July 16, 2010
“What happens in Vegas stays in Vegas.”
Well, not in this case it doesn’t.
I’d like to share one of the most exciting things I heard at last week’s FreedomFest – the annual Las Vegas event, hosted by my good friend and former Investment U Chairman, Mark Skousen.
I’m pleased to say that I have some very good company on the energy front…
Sweet Vindication
The United States has an abundance of natural gas.
You’ve heard me say that here before – and propose it as America’s energy solution. So imagine my delight when Steve Forbes, FreedomFest’s opening day keynote speaker, stepped up to the stage and said the same thing!
Not only that, he repeated what I’ve said about how we should be capitalizing on those resources right now to help steer us away from our dependence on foreign oil.
To continue reading, please click here...
