A nice trifecta of factors is telling investors that energy stocks are a buy: Investors hate them; insiders love them. And they’re cheap.
Moreover, corporate insiders are buying the pullback. The energy sector saw the most corporate-insider buying the most relative to selling earlier in July, according to Vickers Weekly Insider published by Argus. Argus cited Texas Pacific Land Corp. TPL , Occidental Petroleum OXY ), which Warren Buffett has been buying in size, and ProFrac Holding ACDC ), which provides fracking services
Callum says the SPR and the U.S. production headwinds will turn into moderate tailwinds as the SPR gradually refills and U.S. supply growth slows. Supply growth is impaired because global oil investment was 40% lower last year than in 2014. Cullen says an energy deficit in the second half should push Brent oil BRN00 to $86 a barrel by the end of the year, from recent levels of just under $82.
Besides, history shows that even when the most popular fuel sources get replaced by new sources, we still use more of the displaced fuels years later, compared to when they were the top fuel in use, Nygren says. “It is reasonable to think that fossil fuels go the same way.” 3. They are returning cash to shareholders via buybacks and dividends. For example, EOG pays a 2.7% yield, COP pays a 4.7% yield and APA pays a 2.6% yield. “The willingness of management to return capital to shareholders is a very important characteristic for us,” Nygren says.
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