Energy Stocks

Energy stocks include oil, coal and gas producers, as well as other energy producers such as solar panel or wind turbine manufacturers.

The direction of a stock like Enerplus Corp (ERF) is very dependant on Nymex Oil and Natural Gas (UNG) price trends.

The PE is huge because of the structure of the company - they expense 100% of drilling and expansion costs but dont get eps until later quarters. They are undertaking a massive expansion and growth plan and are spending 800 million this year alone on drilling and growth. Plus they have leftover "tax pools" which are unused writeoffs from previous years to keep the tax bill low which keeps available cash to shareholders up. This used to be a trust and they wee unable to benefit from all the costs in the past. Operating cash flow is all you care about. Its $3.30/share+ annually and will grow to over $4 by the end of the year. If oil and gas rise from here it will grow even more. Trading at 3+ times operating cash flow - theres your "low PE"

Gasoline has gone from $2.79. to $3.49 in the last 45 days, that is $0.70.

They say each $0.25 means 50,000 jobs lost, which is 150k jobs.

Add another 2% loss to any fool working and it's a house of cards.

Regarding PGH and ERF, High Payout Ratio means they pay you money that they don't have. These two companies have negative income in spite of good revenues. So where does the dividend money comes from? They borrow it. So, if they keep paying the same dividend the stock price has to go down. Also, a High Payout Ratio is a red flag that dividend is not sustainable, which means at some point they have to cut dividend and when that happens, the price drops significantly, more than the dividend paid. Not an expert by any standard but this is what I heard from the gurus on radio.

Also Consider this high yield Bond fund

And this high yield corporate investment fund

Mukesh Ambani richest man in India and CEO of Reliance Industries thinks that renewable energy in particular solar energy will see the biggest growth over the next 50 years.

Time to Buy?

As always, timing will be key in making an NG play, but given December's warm forecast compared to an overall colder winter than the previous one, this is certainly an enticing opportunity. With prices and related funds taking a hit in recent sessions the time to buy may be soon, as this commodity typically reacts to the 10-day forecast rather than what is happening here and now. This means that if there is a sudden cold snap predicted for the end of December next week, prices will shoot up then and there as opposed to when the cold snap actually occurs.

If you have a bullish sentiment for NG this winter, the next few days may be the perfect entry point as the warm weather hangs around until we hit the depths of winter. Below, we outline three ways to make a play on an NG rally.

• 1. United States Natural Gas Fund LP (UNG): When it comes to NG futures, few products (including the futures themselves) have more liquidity than this ETF. While it is not a good representation of the commodity over the long term, it is an effective trading instrument for positions of a shorter length.

  2. 3x Long Natural Gas ETN (UGAZ): If you really want to put your money where your mouth is, this fund offers a 300% leverage on NG futures. Be advised that this kind of strategy is not for the faint of heart and will be extremely volatile.

  3. ISE-Revere Natural Gas Index Fund (FCG): This ETF takes a different approach to investing in this fossil fuel, offering exposure to companies that derive the majority of their revenues from NG production and exploration