Audio Length: 00:23:34
Welcome to Episode #8 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
In this episode, Tracey is joined by Sheraz Mian, Zacks Director of Research, who also worked as an oil analyst for seven years. That makes him the perfect guest to have on to discuss what’s really going on in the energy market.
With crude still stuck around $40 a barrel over a year after the largest sell off in crude began, it’s worth asking if this energy contraction is different than the others.
The two previous major price contractions, in 2008-2009 and 1985-1986, were both swift. The price fell quickly and then started to recover within a year. This time, the chart doesn’t look so friendly. Not only has crude not rebounded, some analysts believe it hasn’t even hit bottom yet. They think crude may go as low as $20 a barrel if the dollar continues to strengthen.
With so much uncertainty in the crude market, where does that leave investors interested in the oil stocks?
Tracey and Sheraz discuss some of the major exploration and production companies including Anadarko (APC – Analyst Report) and Apache (APA – Analyst Report). Will they survive the energy downturn? What about their dividends? Will the companies continue to pay those out?
Should investors stay clear of all the smaller E&P companies due to the high risks? Or is that where they’ll find the highest reward?
They also chat about the big integrated energy companies including Chevron (CVX –Analyst Report), Exxon (XOM – Analyst Report) and British Petroleum (BP – Analyst Report).
These are the blue chip energy companies. They’ve been through downturns many times before. Chevron and Exxon have been paying, and raising, their dividends for over two decades.
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