Current trends point to rewarding investment in natural gas and oil. We believe that positive trends can continue for the decade subject to interruption in some years. Large cap buy recommendations are balanced among five groups with global representation from the U.S., Europe, Canada, China, Russia, Brazil and Australia. Low McDep Ratio favorites include ConocoPhillips (NYSE:COP), Total S.A. (NYSE:TOT), Lukoil (OTCPK:LUKOY), Devon Energy (NYSE:DVN) and Canadian Oil Sands Trust (OTCQX:COSWF).
All large cap buy recommendations are in an uptrend with stock price above the 200-day average except ExxonMobil (NYSE:XOM), our lowest risk choice and one of the few triple-A investments remaining. The long-term price for delivery over the next six years for crude oil, the world’s largest traded commodity, settled above $90 a barrel, continuing an uptrend resumed in mid 2008.
Six-year natural gas at $6.70 a million btu, rests on the 40-week average of $6.72. Overlooked as the most economical form of clean, green energy, natural gas has more growth potential in volume and price. Natural gas and oil representation is emphasized while stocks are ranked on an unlevered basis by McDep Ratio and grouped geographically. Net Present Value (NPV) and ratio of Debt to Present Value capsulate valuation and leverage. Every stock pays income. The highest income payer, COSWF, disclosed production above capacity in December, which strengthens expectations for an increase in distribution to be announced when the trust is among the first to release final 2009 results on January 28.
Originally published on January 5, 2010.