You and I have a deal. I try to give you insight into what's happening in the energy markets and with energy stocks and you try to find your own best ideas for investing using those insights.
What I generally don't do is give you a stock name and a target price. Although that's an idea I might use, you can never know just where or when I execute the trade, both in buying and selling. That difference of trade timing can make an enormous difference in the profits or losses you might realize, compared to me.'
In my last column, I tried to give you what I thought was the most important energy trend for 2014 to come. You were supposed to come up with some ideas of your own for identifying profitable ideas from that trend. It was not just a preface to my own ideas for stocks, which I will give you in Thursday's column -- it was a chance for you to find some ideas of your own and even to help me and teach me about some opportunities I might be missing.
Last week's column was devoted to the bifurcation I saw between the U.S. and global crude production cycle and the long-term price disconnects I saw continuing (and likely getting worse) during 2014. It just so happens that the comments from outgoing EOG Resources (EOG) CEO Mark Papa helped to support my thesis on the same day as my column. That helped to crater just the mid-and large-cap exploration and production companies that are likely to suffer most from this price disconnect.
If you've been out of these stocks, about which I warned you in previous columns were likely to suffer from this domestic energy price disconnect, you had no reasons to be afraid of this downturn. You were likely welcoming it.
That's because there is a value spot to be found in these finely run and strong producers like Noble (NBL), Continental Resources (CLR), Cimarex (XEC) and the aforementioned EOG -- just not at the hyped and high-flying prices they previously occupied. Many of you wrote me with suggestions using these stocks, or others like it -- domestic exploration and production players in expanding shale plays. Those guys will have their time in the sun again in 2014, I promise. Papa's comments have certainly hastened that time in coming, but it's not yet and not here.
Only one of you mentioned the refiners, which is at least is taking great advantage of this monster trend for 2014 and a great idea. But I was looking for something else for right now: stock ideas that take advantage the relative high price of crude virtually everywhere else in the world except here in the U.S.
The reason this will be a wonderful value resource for finding great stock ideas is that my thoughts do not end with the price disconnection I've already discussed. While I believe I'm early to that trend, there are some other analysts who believe that trend will last.
The other important point is that I believe that global oil prices will remain high and go higher still in 2014. That is a position that's almost alone among analysts. Most think that the oil shale glut here in the U.S. and the diplomatic 'kumbaya' moments in Syria and Iran will lead to a huge drop in prices in the coming year. I do not. That will help, of course, to bolster profits for some select oil producers for 2014.
Back to your notebooks and teach me about some stocks -- send me your ideas for great oil stock ideas for the coming year and I'll show you mine come Thursday.
It is hoped that we'll all learn something -- and make some money in the process.