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Five oil investments to buy for profiting while Russia’s President Vladimir Putin’s war rages in Ukraine and intensifies in the eastern region of Donbas feature two stocks and three funds that seem poised to climb further.
The prospects for oil stocks and funds seem especially strong as the European Union (EU) is moving toward banning Russian oil imports. Even though negotiations for an oil embargo would not begin among the EU member countries until after the final round of the French elections on April 24 that will decide whether the country’s President Emmanuel Macron will be retained, momentum is building to further restrict importing Russian oil that is funding the invasion of Ukraine.
A ban had been resisted due to the dependence some European nations such as Germany on Russian oil due to a lack of readily available substitutes and the infrastructure to store huge volumes of the commodity if it is shipped from offshore rather than delivered through existing pipelines. However, Macron is among the European leaders who are calling for the ban in response to Russian troops killing thousands of Ukrainian civilians, including women and children, while attacking hospitals, schools, residential areas, churches and a theater used as a shelter. Putin’s forces also shelled and seized Ukrainian nuclear power plants.
New Fortress Leads Five Oil Investments to Buy as Russia Ravages Ukraine
With Europe importing 36.5% of its oil and 41.1% of its natural gas from Russia in 2020, it will not be easy to obtain such large amounts of those commodities from other sources. European Commission President Ursula von der Leyen announced on April 5 that Europe will impose an import ban on coal from Russia valued at $4.39 billion, or 4 billion euros, annually to cut another important revenue source for Russia. The EU bought 19.3% of its coal from Russia in 2020.
To seize opportunities for investing in oil and natural gas, Jim Woods, who heads the Successful Investing and Intelligence Report investment newsletters, as well as the Bullseye Stock Trader and High Velocity Options trading services, is recommending New Fortress Energy LLC (NASDAQW: NFE). In the April 14 edition of Bullseye Stock Trader, Woods laid out his case for buying shares in New Fortress Energy, an integrated gas-to-power company that provides modern infrastructure solutions to produce clean and reliable energy.
The company’s business model spans the entire production and delivery chain from natural gas procurement and liquefaction to logistics, shipping, terminals and conversion or development of a natural gas-fired generation. Geographically, it has operations in North America, the Caribbean and Europe.
“As we all know, the price of oil and natural gas has been elevated by the supply constrictions emanating from Russia’s ghastly war on Ukraine,” Woods indicated. “That’s caused a reallocation of capital into domestic firms that produce these key ingredients needed to power the planet.”
First of Five Oil Investments to Buy Soars Despite Russia Ravaging Ukraine
Woods referred to NFE’s most recent quarter, when the stock grew its earnings per share (EPS) by an astronomical 7,100%. As for share price appreciation, so far in 2022, NFE has risen 88.03% and it is up 98.56% in the last three months. For the past month, the stock is up 42.96%.
Woods predicted that a recent pullback in the share price could serve as a “launching pad” for the shares heading into its next quarterly earnings release. That earnings report is expected on Thursday, May 5, before the market’s opening bell.
Pension Fund Chairman Chooses Three of Five Oil Investments to Buy
Bob Carlson, a pension fund chairman who also heads the Retirement Watch investment newsletter, said his favorite way to invest in oil is through Energy Select SPDR (XLE). In fact, Carlson describes XLE as his top fund choice for 2022.
“I think the imbalance between demand and supply for energy and oil is likely to continue for a while,” Carlson informed me. “The main risk to investors is that global economic growth declines and reduces demand for energy and oil. That’s a real possibility as higher prices reduce demand by forcing people to reduce consumption or seek alternatives. Supply and labor problems also are reducing growth because businesses can’t provide goods and services.
“Recent data indicate growth is slowing in China and many other areas. It’s something to watch closely. For now, demand is well above supply and will keep energy prices elevated until growth slows or even declines.”
Five Oil Investments to Buy Include Tortoise North American Pipeline Fund
Tortoise North American Pipeline (TPYP) uses a passive management approach to track the total return performance of the Tortoise North American Pipeline Index. The fund is intended to reflect the characteristics of the market, serve as a benchmark to analyze the pipeline sector and provide an attractive total return in a historically defensive sector.
TPYP, with $566.1 million in assets, holds a coveted five-star rating from Morningstar. The investment also does not send its shareholders the K-1 tax forms that many people seek to avoid due to their complexity.
Tortoise North American Pipeline is up 9.49% in the past month, 17.83% in the last three months, 24.51% so far this year and 38.71% in the past year. Among the fund’s holdings, 78.07% are in the energy business and 21.93% are utilities.
Broad Commodity Fund Joins Five Oil Investments to Buy
ETF iShares GSCI Commodity Dynamic Roll (COMT) is another fund that Carlson told me that he favors. The fund seeks to follow the Goldman Sachs Commodity Index, which is more heavily weighted to energy than most other commodity indexes, he added.
“I prefer to invest in the commodities themselves instead of companies in commodity businesses,” said Carlson, who also serves as chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. “Investing in the commodities avoids potential problems with management, debt levels, regulators, labor and more.”
Funds are the best way for most investors to take positions in commodities, Carlson counseled. COMT dipped 3.09% in trading on April 19, but it is up 7.82% in the past month, 20.59% for the past three months, 39.35% so far in 2022 and 62.60% in the last year.
Exxon Mobil Earns a Berth Among the Five Oil Investments to Buy
Exxon Mobil Corp. (NYSE: XOM) received the recommendation of two investment leaders, Bryan Perry, who heads the Cash Machine investment newsletters, as well as the Premium Income, Quick Income Trader, Hi-Tech Trader and Breakout Options Alert advisory services, and Michelle Connell, president of Dallas-based Portia Capital Management.
Given that President Biden lifted drilling restrictions for public lands, maybe oil and gas prices will ease a little, Connell suggested. Even though Exxon Mobil has risen significantly in more than the past year, she still sees further upside and suggested investors may want to accumulate shares by using a dollar-cost-averaging strategy. That occurs when an investor divides the total amount of an investment across periodic purchases of a given asset to reduce the impact of volatility on the overall price.
Exxon is one of the major oil players that has exposure to countries that are relatively new to oil production, Connell continued. Such actions would decrease the developed world’s reliance not only on Russia, but on other “bad actors” such as Iran and Venezuela, she added.
Exxon has as many as 10 oil projects under development in the Caribbean, commented Connell, a former portfolio manager. These potential projects could lead to XOM producing an additional 1 million barrels per day by 2027, she added.
Other reasons why Connell indicated she liked Exxon Mobil are that the company is:
- the world’s largest refiner with a total capacity of 4.6 barrels per day;
- paying a strong dividend yield of 4%;
- continuing to pay dividends for 140 straight years and boosting its payout annually for the last 39 years;
- using its strong cash flow to cut debt and repurchase stock;
- selling for a relatively cheap 9.9 times its forward price-to-earnings (P/E) ratio;
- and forecast to report good results on April 29.
Craig Elam, a senior market analyst with UK & EMEA OANDA, focuses on major macroeconomic trends, technical analysis and worldwide events that affect different asset classes and investors. He remarked that trading in oil markets led Brent and WTI to fall around 5% on April 19 due to reduced growth forecasts and slower Chinese growth at the end of the first quarter when lockdowns appear to have driven most of the move, after a four-day rally as the world’s second-largest economy eased some strict COVID-19 restrictions.
Protests in Libya have knocked out around half a million barrels per day of output, Elam commented. While only a temporary hit, it comes at a bad time as far as global supply is concerned, Elam added.
In addition, OPEC+ countries produced 1.45 million barrels per day less than promised as part of a previous deal to gradually return output to pre-pandemic levels, Elam said.
COVID-19 Lockdowns Expand in China, Further Imperiling Global Supply Chains
COVID-19 lockdowns have affected at least 373 million people in Chinese cities that represent roughly 40% of the country’s gross domestic product (GDP). A key effect likely will be further disruption of the world’s supply chain for a variety of products.
Many of Shanghai’s 25 million residents remain in lockdown, as the Chinese military and additional health workers have been dispatched there to aid in the response. Home to the world’s largest port, Shanghai has struggled to unload cargo due to strict regulations that have caused shipping containers to stack up. Some frustrated Shanghai residents have taken videos that have gone viral to show people screaming from high-rise buildings about the need for food.
Also in China, young children with COVID-19 have been separated forcibly from their parents, fueling public dissent, as Chinese leaders seek to stop the spread of a new, highly contagious subvariant of Omicron, BA.2. The variant also is spreading a new wave of infections in European nations such as Germany, the Netherlands and Switzerland.
COVID-19 Deaths Globally Top 6.2 Million, Cases Jump Past 505 Million
COVID-19 deaths worldwide exceeded 6.2 million to total 6,203,343 on April 20, according to Johns Hopkins University. Cases across the globe have jumped to 505,975,895.
U.S. COVID-19 cases, as of April 20, hit 80,732,932, with deaths rising to 989,331. America has the dreaded distinction as the nation with the most COVID-19 cases and deaths.
As of April 19, 256,880,347 people, or 77.4% of the U.S. population, have obtained at least one dose of a COVID-19 vaccine, the CDC reported. Fully vaccinated people total 218,996,861, or 66%, of the U.S. population, according to the CDC. In addition, 99.6 million people have received a booster dose of COVID-19 vaccine.
The five oil investments to buy offer opportunities to profit from fossil fuels that have become increasingly important as Putin’s invasion of Ukraine has led to atrocities that triggered many countries worldwide to impose economic sanctions on Russia to pressure its leaders to call their troops home and stop the war. However, Putin seems willing to continue sending soldiers to their deaths and indiscriminately killing Ukrainian civilians to achieve his goal of expanding Russia’s control of sovereign soil, ports and commodities of its natural-resource-rich neighboring nation.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports.
