In a rapid turn of events, the Obama administration will now
dole out $8 billion in a federal loan-guarantee program aimed at
reducing energy companies' coal dependency.
The decision comes after last week the Obama administration
instructed the United States Environmental Protection Agency
(EPA) to draft new rules to limit emissions at U.S. coal-fired
power plants. With directives for setting up more stringent
carbon pollution standards for active coal plants, the move would
make a large number of coal-fired plants unviable.
As of now, approximately 40% of U.S. electricity is generated
at coal-fired plants. A Republican backlash in the form of
Offshore Energy and Jobs Act bill to unshackle U.S. offshore
areas promptly followed.
ALLIANCE RES (ARLP): Free Stock Analysis
DELEK LOGISTICS (DKL): Free Stock Analysis
HORNBECK OFFSHR (HOS): Free Stock Analysis
OASIS PETROLEUM (OAS): Free Stock Analysis
To read this article on Zacks.com click here.
This is making us apprehensive, as we feel tax hikes and spending
declines are expected to slow growth in the ongoing fiscal year.
In recent times, higher production in the U.S. energy sector has
resulted in lower energy bills and in turn reduced imports. Also,
the widespread adoption of new drilling and exploring techniques
has increased domestic supply and lowered the relative price of
natural gas in the U.S. This cost advantage aided economic
In the case of petrochemicals, the low relative price of natural
gas is a significant cost advantage for a range of products
including fertilizers, solvents, and plastics. This development
is not only encouraging investments in exploration, production
and petrochemicals, but is also benefiting manufacturers that are
positioned to take advantage of lower energy costs. More
generally, it serves as an important prop for U.S. exports, and a
foil to the import of foreign produced goods.
However, in light of the ongoing energy tussle, we feel the
momentum of economic recovery may lose some steam. In particular,
it may be a good time to add a few strong energy stocks to your
investment portfolio. We think the following four energy stocks
are future gainers given their attractive valuation and favorable
Oasis Petroleum Inc.
): This independent oil exploration and production company
currently holds a Zacks Rank #1 (Strong Buy). The stock currently
trades at a forward P/E of 13.6x and a P/B of 4.5x. The stock
also has a long-term earnings growth expectation of 32.5%.
Hornbeck Offshore Services, Inc.
): This Zacks Rank #1 (Strong Buy) oilfield services company also
deserves investors' attention. The stock currently trades at a
forward P/E of 16.4x and a P/B of 1.7x. The long-term earnings
growth expectation for the stock is 25.0%.
Delek Logistics Partners, LP
): The pipeline operator currently carries a Zacks Rank #1
(Strong Buy). With a forward P/E of 17.1x and a P/B of 3.5x,
alongside a long-term earnings expectation of 11.0, it
automatically places itself on our hot list.
Alliance Resource Partners LP
): Lastly, in times of doldrums over coal, this coal producer
with a Zacks Rank #1 (Strong Buy) comes foremost to our
attention. The stock currently trades at a forward P/E of 11.0x
and a P/B of 3.6x. It is expected to witness a long-term earnings
growth rate of of 6.0%.