Breakout

3 ways to play the U.S. energy boom

Jeff Macke
Breakout

3 ways to play the U.S. energy boom

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3 ways to play the U.S. energy boom

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The energy market is a baffling labyrinth of antiquated regulations and international crosscurrents. Thankfully for investors Divine Capital founder and CEO Danielle Hughes has done the legwork needed to help investors get their arms around the industry. In the attached video she walks us through the basics and offers three investment ideas for those looking to dip a toe in the sector.

Hughes says the energy story is one of “short-term, medium-term, long-term growth in every direction. We are becoming a net exporter because of the way that we’re actually taking energy from the ground.”

Hughes thinks the energy companies and their customers are looking anywhere and everywhere for alternatives to the volatility of the international oil markets. Fracking, natural gas and renewable sources are all welcome as long as they provide a way to keep the grid flowing.

She’s got three ways to play:

Occidental (OXY)

It pays a 2.5% dividend, has reduced costs and increased production. Hughes says they’ve been increasing efficiency and posting strong results - good business no matter what the industry.

Cameron International (CAM)

This provider of flow equipment is something of an anti-Oxy in the sense that it has no dividend, and a track record notable primarily for consistently missing estimates. What Hughes likes about Cameron is the presence of activist investors pushing the company to prune assets and focus the business.

Royal Dutch Shell (RDS-A)

Hughes’ final pick is another strong yield play pruning assets and focusing operations. The new CEO and the company’s focus on renewables encourage her. “The oil is not always going to be in the ground but energy desires are always going to be there.” Like other forward thinking energy companies Royal Dutch is ahead of the game.

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