The Energy Companies No One Is Talking About

Investors with a hopeful energy sector outlook can turn to this investment vehicle for a less volatile way to play the industry.  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [Browser View]( [Wealthy Retirement]( The Energy Companies No One Is Talking About Mable Buchanan, Assistant Managing Editor, The Oxford Club [OPEC Weapon to Hit U.S.?]( This isn't a bomb or chemical warfare, but it could severely damage the U.S. way of life. [Learn more.](  Editor's Note: This week's Stat Sheet explores the volatile energy sector. Here at Wealthy Retirement, we believe in making steady passive income the focus of our investing strategy. The unique play below applies this screen to the somewhat fickle oil industry. And it may be more important than ever to focus on safety when investing in energy, according to our friends and energy experts at our sister e-letter Profit Trends... There, Chief Trends Strategist Matthew Carr and Energy and Infrastructure Strategist David Fessler saw the recent oil crash coming. Now they believe a wave of bankruptcies in the sector could be the long-term result. [Click here]( to learn more about the major energy disruption they call the "[OPECalypse](" and how to keep your portfolio safe. - Rachel Gearhart, Associate Franchise Publisher ---------------------------------------------------------------  [Mable Buchanan]  In April, heartbroken energy investors watched as the price of oil collapsed, reaching a loss of more than 55% year to date. Then, the market added insult to injury as the price of crude dropped below $0. Today, the commodity trades for $24 per barrel. Not long ago, it was valued at nearly three times that price.  [Chart - Oil Takes a Steep Drop in 2020]  Efforts on the part of OPEC, and Saudi Arabian production in particular, to flood the market with oil have been blamed for this drop in demand. But on Wednesday, this notoriously volatile market began showing signs of life. Saudi Aramco, Saudi Arabia's state-run oil magnate, increased its crude prices and cut production, perhaps signaling the start of a larger rally in the energy sector. (Though, according to Barron's, storage for the excess still remains a concern, so this may not spark the sudden rebound many energy investors hope for.) Still, eager investors in this rough-and-tumble oil market shouldn't get ahead of themselves. The past several months have proved the disruptive power of crude price fluctuations. The fallout has led some of the biggest players in energy to take what may be insurmountable blows to cash flow, as we saw in [this week's Safety Net](. That said, forward-thinking energy investors should carefully consider how they want to play crude's eventual recovery. For investors who won't tolerate volatility but are unwilling to leave fossil fuels behind, it will be important going forward to get very selective. Not long ago, utility and energy stocks were considered "widow-and-orphan stocks" - trustworthy income generators that post competitive yields with little risk. Then, oil tanked. Between 2014 and 2016, investors grew disillusioned with the sector. Though it posted a modest recovery until this April, the sector never regained its former glory. But alternative plays on the sector may offer a way for investors to "think differently" when it comes to investing in energy.  [Just like Valeant all over again? (See how to profit up to 500%...)]( Oxford Club biotech expert Marc Lichtenfeld has uncovered an unusual situation - a Big Pharma company accused of lying about a potential coronavirus vaccine. "This is just like Valeant's stock all over again," he says. Lichtenfeld showed a group of analysts and researchers a way to profit by 500% before Valeant's colossal 93% drop in share price. [If history proves Marc right again, fortunes can be made from this new stock's fall.](  Big Oil's Less Reckless Cousins To dodge oil's fickle ups and downs, investors can turn to master limited partnerships (MLPs). This vehicle is not tied to underlying commodities, like the prices of natural gas and oil. MLPs fall into a variety of categories, like gathering and processing or pipeline transportation for oil or natural gas. MLPs hold Big Oil companies as clients on long-term contracts, such as for the use of pipelines. They are required to pay out distributions, much like real estate investment trust (REITs). As a result, MLPs are uniquely tax-advantaged. Their distributions are considered a return of capital, and as a result, they lower an investor's cost basis. These companies fell along with the broader oil sector in 2014, likely due to dwindling investor sentiment with energy. Big Oil's lessened commitment to long-term contracts and some MLPs' overeager distribution growth just before the downturn were also to blame. However, because MLPs as a whole are less correlated to crude prices, they held up better than Big Oil at the beginning of the downturn in 2014 and showed less volatility overall.  [Chart - MLPs Prove More Resistant to Voltatility]  During today's collapse in oil, investors can take comfort in the fact that MLPs have stronger balance sheets now than they did in 2014. This is thanks to their efforts at decreasing debt and cost of capital and increasing distributions, according to Barron's. What's more, sinking production costs can help MLPs turn a profit even if oil doesn't approach new highs. David Fessler, energy expert at our sister e-letter Profit Trends, [forecast a wave of oil sector bankruptcies]( following the current disruption in the sector. Investing in high-quality, less-correlated MLPs can be a safer alternative for investors who want to stay in the sector. Time to Diversify Regardless of whether you choose to invest in MLPs, it's important to remember the value of diversification. Energy can be an important part of your portfolio, especially when played safely. In recent years, the energy sector as a whole has been taking it on the chin. However, with a little creativity, investors can still achieve the solid and high-yielding income streams they value. In the meantime, they'll be paid to wait for crude to recover. Good investing, Mable P.S. According to Matthew Carr and David Fessler, the energy sector may have even more trouble in store. [Click here]( for the details on which oil companies they expect to fail.  [Click Here to Comment](  [Old Woman's Hands]( ["The Most Exciting Breakthrough in the History of Pain Relief"]( The shocking, POWERFUL ingredient in this world-renowned doctor's hands may be [the ultimate pain reliever](. And now, after a controversial 82-year ban, [this proven natural MIRACLE]( is 100% legal. Your stiff hands... aching back... and painful knees... are GONE, starting in as little as seven seconds. [Go HERE now.](  - More From Wealthy Retirement -   [Seniors With Financial Advisor]( [Welcome to the Quant Investing Revolution]( [Today, quant investing and swing trading are much more accessible.](  [Seniors With Financial Advisor]( [Your Best Ally Is Looking to the Big Banks]( [Steve Eisman, an investor ally and enemy of the Wall Street banks, is changing his tune...](  [Gas Station]( [Is This Oil Giant's 33-Year Streak About to End?]( [Can this Dividend Aristocrat maintain its dividend safety despite low oil prices?](    [Facebook]( [Twitter](   [#1 Coronavirus Testing Stock Is a "BUY"]( A top maker of genetic testing kits has now made one of the first next-generation sequencing (NGS) tests for the coronavirus. This could be a game changer. And yet, because of the emotionally driven sell-off, shares are dirt cheap. [Find out the details on this ultra-cheap stock right here.](  You are receiving this email because you subscribed to Wealthy Retirement. 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