Profit From The Oil Crash With These 3 Deeply Undervalued, High-Yield Blue Chips

Nov. 19, 2018 3:08 AM ETENB, TRP, XOM, ENB:CA, TRP:CA132 Comments

Summary

  • Due to several factors, oil prices have plunged into yet another bear market, causing many investors to worry that another epic oil crash has started.
  • The reality is that the recent oil mini-crash was caused by mostly short-term and transitory events that mean crude is likely to bottom soon.
  • The fundamentals of the oil industry point to crude prices rising slightly in the coming years (average long-term price $73-80 per barrel).
  • That makes today a great time to add high-yield energy blue-chips to your portfolio.
  • Enbridge, TransCanada, and Exxon are some of the most undervalued, low-risk, high-yield energy stocks you can buy today. All three should deliver +14% long-term CAGR total returns.

(Source: imgflip)

The last few weeks haven't just been a tough time for stocks, but for oil prices as well. Crude has plunged, with West Texas Intermediate (the US oil standard) at one point falling for 12 straight days. That was the longest losing streak since oil futures began trading in 1983. On November 13th alone, US crude futures plunged nearly 8%, its largest single-day decline in three years, which itself occurred during the second-worst oil crash in over 50 years. And at one point, WTI fell 26% from its recent highs, plunging it into a bear market.

The ferocity of the crude plunge brings back terrible memories of the 2014-2016 oil crash, when oil plunged 76% peak to trough, and which cost some investors a fortune. Many even fear that this is the beginning of yet another epic crude crash that will decimate energy investors who have yet to fully recover from the last one.

So, let's take a look at the reasons for crude prices falling off a cliff. More importantly, let's learn why oil prices are likely not going to keep plunging and may have already bottomed (or soon will). That means that today is a great time to add three high-yield dividend growth blue chips to your portfolio, which can deliver not just generous, safe and fast-growing income, but also market-beating +14% total returns in the coming years.

Why Oil Has Plunged...

The oil market is complex, with prices being set at the margin via hundreds of global variables. However, three things, in particular, have triggered this latest bear market for crude.

First, there are the fresh sanctions imposed on Iran by the US, which were supposed to go into effect on November 5th. In previous months, analysts warned that this could potentially remove up

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Adam Galas is a co-founder of Wide Moat Research ("WMR"), a subscription-based publisher of financial information, serving over 5,000 investors around the world. WMR has a team of experienced multi-disciplined analysts covering all dividend categories, including REITs, MLPs, BDCs, and traditional C-Corps.


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I'm a proud Army veteran and have seven years of experience as an analyst/investment writer for Dividend Kings, iREIT, The Intelligent Dividend Investor, The Motley Fool, Simply Safe Dividends, Seeking Alpha, and the Adam Mesh Trading Group. I'm proud to be one of the founders of The Dividend Kings, joining forces with Brad Thomas, Chuck Carnevale, and other leading income writers to offer the best premium service on Seeking Alpha's Market Place.


My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives.


With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and safe and dependable income streams in all economic and market conditions.


Disclosure: I am/we are long ENB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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