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Commodity Investing

Four Stocks to Play Our Changing Energy Landscape

Right now, it’s hard to imagine exactly when oil prices will rise.

Saudi Arabia won’t continue to flood the world with low-priced oil. It can’t. At least, not without making the other OPEC members piping mad.

These countries can’t make any money selling Brent crude for less than $50 per barrel. For example, Iran and Venezuela need to sell oil for at least $80 per barrel to break even.

Then there’s the simple fact that demand for energy – and not just oil – continues to rise…

The chart below shows global energy demand through 2030.

Projected World Energy Consumption by Continent 2015 to 2030 chart

As you can clearly see, the biggest demand driver over the next 15 years is Asia. That’s a real problem in the making. Instead of a supply glut of oil, we are on the verge of a complete reversal.

Soon, we are going to be scrambling to find 10 million more barrels per day of oil to satisfy global needs*.

Demand will inevitably lift crude prices. But other sources of energy will be called upon to fill the coming deficit.

Where’s All This Energy Going to Come From?

First things first… you can forget one source that’s dominated the energy market for decades.

I’m referring, of course, to coal. It’s going to figure less and less in the global energy mix as we move forward**.

It’s not exactly a state secret that coal is the biggest polluter when it comes to fossil fuels. Investments in most coal companies are going to perform poorly in the years ahead, so I’m not recommending any of them.

In fact, one of my favorite plays in energy right now isn’t a true source at all. It’s energy efficiency.

Over the next 15 years, incandescent bulbs will increasingly be found in museums – and nowhere else. LED lighting uses about one-sixth the power of incandescents. As a result, LED bulbs are quickly finding their way into new commercial buildings, highway lighting and residential homes.

Cree Inc. (Nasdaq: CREE) has had trouble turning a profit. However, it’s certainly poised to do so as LED lighting use continues to grow. And it’s a great time get in, as shares are trading near 52-week lows.

Another Solid, Long-Term Play

Next up… solar.

If you’ve been reading you know solar will continue to be the world’s fastest-growing energy source.

Ten years from now, it will be unusual to find a home, commercial building or warehouse without solar panels. Panel efficiencies continue to rise, and soon energy storage will be part of every solar installation.

SolarCity Corp. (Nasdaq: SCTY), this Elon Musk-driven solar installation company is expanding at a rapid pace.

Over the next decade, SolarCity will become a household name and operate in all 50 states***. Even better, the company recently reported earnings that failed to reach guidance, sending the shares plummeting.

Don’t Count Out Oil

Lastly, oil is going to remain a big part of the transportation sector. As you saw in the graph above, Asia will drive (literally) the growth in demand for crude.

There are hundreds of millions of new drivers there. And they all want what we already have: shiny new cars.

I’d consider big refiners like Exxon Mobil Corporation (NYSE: XOM) or Royal Dutch Shell PLC (NYSE: RDS-A). Both are going to be around a long time and pay good dividends****.

There are plenty of others out there, too. Just be sure to do plenty of research.

Good investing,




Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of professional analysts* ** *** ****. 


As a degreed electrical engineer, Dave served as vice president of two successful tech businesses: LTX Corporation and Quality Telecommunications Inc. He now provides unique and groundbreaking insights into the energy sector. His new book, The Energy Disruption Triangle: Three Sectors That Will Change How We Generate, Use, and Store Energy, quickly became a best-seller. Dave is the Energy and Infrastructure Strategist for the Profit Trends free daily investment e-letter.

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