It Pays to Buy These 8 Energy Stocks

12/19/2011 7:30 am EST


Curtis Hesler

Editor, Professional Timing Service

Beyond the most conservative investors, who prefer cash or cash equivalents for their “safe” income, there are some reliable income stocks that throw off more income than a CD or money market and can keep you ahead of inflation, writes Curtis Hesler of Professional Timing Service.

Everyone has a unique financial makeup and situation in life. Some need to remain extremely conservative and need large cash reserves. Bank CDs will work for that goal.

If your age, other asset makeup, and risk tolerance allows it, some blend of income equities will enhance the yields on your cash deposits. In that light, I can recommend specific issues:

Apache Corp. (APA)
This is not on the list of world crude producers suffering production declines, but they don’t offer a significant dividend. Nevertheless, they are the only major I think one should own.

Most of their work is done in friendlier regions, and they sport a special talent of being able to squeeze the last technically available drop of oil out of played-out fields. They are an asset to our enemies as well to Western producers.

I am going to bring the downside buy price down a little since prices are at favorable levels. Limit purchases to $100 or less. If you would like a deeper buy target—a stink bid, if you will—put orders in at $82. I am not confident you will get some at that price, but there is strong support at that level. Whatever you do, don’t pay over $100.

Blackrock Energy (BGR)
Better choices for income start here. They pay about 6.2% at current prices.

I dropped the buy price to $23, which has not been reached as yet. Considering the short-term weakness coming up in crude, I think we have a decent chance to buy additional shares at $23. This is a closed-end fund; and while it carries a decent upside potential, further purchases at this time need to be advantageous to your overall position.

Enerplus (ERF)
Paying over 8.0% at current prices. Our downside buy price is now $23.

Baytex Energy Corp. (BTE)
This stock has done very well for us. I have had BTE on hold for some time, but I would like to take advantage of weakness over the next several weeks to accumulate if possible.

The downside buy price for additional shares is $41. The dividend is not as generous as with some of our other recommendations, but it is a decent 4.65% nonetheless.

Legacy Reserves (LGCY) and Linn Energy (LINE)
Our old friends are paying around 8.1% and 7.5%, respectively. New purchases in Legacy should be limited to $24 or better. Linn Energy should now be accumulated at $35 or better.

Crescent Point (CPG)
Paying around 6%. A few shares for income are warranted. I like their Bakken exposure and I like North American-Canadian producers who are well away from potential upsets in the Middle East. I also like the advantage that the Canadian dollar has against the US dollar over the longer term.

Kinder Morgan (KMP)
Shares touched our buy price at $65 and then ran smartly to new highs. Additional shares should be purchased on a scale-in basis. Purchase 50% at $75.00 or better and the other 50% at $70.00.

KMP has been an excellent investment for us in the past. And although the dividend is not enormous, it is decent at just over 6% if you can purchase on weakness.

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