For the first half of 2008, most energy stocks were on a tear; however, that has all seemed to have faded over the last couple of months. After all things can only grow so quickly, right?
Many have already dumped their energy holdings, but, for those that haven’t, you just might want to hold on for a little bit longer.
Sure we had Gustav and then soon Hana, Ignacio, abc.. (who remembers the name). The point is winter is just around the corner.
We know it WILL get cold. People will have to put on the heat and whatever else keeps them warm. It WILL get darker sooner, and people will be spending more time inside. The weather will make more people drive, rather than walk, bike, or whatever.
Regardless of the price, hurricanes, or other horrible factors, we can’t avoid mother nature and more energy WILL have to be consumed.
This is why I am not yet giving up on energy. Now I am not going out and buying any stock in the sector. I would still stay with “best of breed” names. Obviously we have to use more energy every winter, so its not like the up-coming season will be any different. In fact, the demand might be a little less than other winters because people trying to conserve, but the demand WILL still be there.
When demand is greater than supply, prices increase. When supply gets low, producers look for alternative sources to help cut costs. It is basically a revolving circle.
Stocks to stay focused on
There are probably many different energy stocks that could be on the rise come winter. The ones I am looking at are Haliburton (HAL) and Chesapeake Energy (CHK). Both these stocks saw great runs for the first half of the year followed by great retreat.
These two stocks shouldn’t be sitting at this level. Once energy becomes the hot topic again this winter, look for both of them to rise. They both have a great business plan and have their hands deep in producing.
We all want to hibernate in the winter and watch some football, at least most of us. Pick up some Hal and/or CHK and come back after the Super Bowl (February) to pick up your profit.
In a market where there are so many uncertainties I will finally be happy to feel the cold air.