While the current turmoil in the oil market might make investors want to spit out oil stocks, EOG Resources isn't going to turn to vinegar and leave you with a bitter taste. This is because the company has a strong balance sheet and is one of the few oil companies that can make money drilling even if oil fell to $40 per barrel. Further, it's very likely that the company can do even better than that as it historically improves results with maturing shale plays.
Like a fine wine, EOG Resources should continue to get better with age. That's why investors should think about taking advantage of the current sale in its stock and sock some away for retirement.
- Founder-led management with a significant personal stake.
- Immense competitive advantage in its scale of pipelines and terminals.
- Protection from volatile oil and gas prices, due to its volume-driven business.
Maxx Chatsko: NextEra Energy (NEE 1.42%) is on a remarkable run of creating shareholder value, and there is no end in sight for the renewable energy powerhouse. Since 2010 the company has increased its dividend 46% while its stock has nearly doubled -- and why not? The power generator's portfolio consists of 52% natural gas, 27% nuclear, and 16% wind, which combine to give it a carbon dioxide emissions rate that is 53% lower than the industry average. While different wine varietals work best with fluctuating levels of carbon dioxide, keeping a low carbon dioxide profile in the case of NextEra Energy will become increasingly advantageous for the company in the years ahead. When peers are looking for ways to mitigate the emissions of their portfolios to meet strict new carbon regulations -- perhaps writing off dirtier, older assets -- NextEra Energy will simply continue to invest in growth opportunities.
But, hey, it's 2015. Why own a power generator? After all, thanks to the accessibility of cheap, distributed, and renewable power generation and the growing focus on low-carbon energy, it isn't so crazy to question the role massive, centralized power plants will play in the future of energy. NextEra Energy took at big leap toward the future by acquiring the utility business of Hawaiian Electric Industries, which had struggled to cope with the large influx of customers turning to rooftop solar systems. The move allows the company to essentially use Hawaii as a sandbox for futuristic energy technologies.
Consider that investments in grid energy storage systems -- capable of smoothing out power distribution throughout the day (when the sun isn't shining) -- and in experimental microgrids are inevitable to successfully accompany rooftop solar. Once the technologies, metering systems, and responsibilities of the utility of the future are proven at scale in Hawaii and the cost of solar becomes more economical in the continental United States, NextEra Energy could roll out its blueprint to all 50 states. What's not to like about decades of growth potential?
Tyler Crowe: If we are going to make wine references here, then ExxonMobil (XOM 0.15%) is definitely a 1961 Chateau Latour. They have both stood the test of time. And -- defying traditional logic -- they both seem to get better despite so many people saying that they are past their prime. If you are looking for an investment with a shelf life that you can keep in the cellar for decades to build wealth, there are few companies that have the track record that Exxonmobil has. For over 75 years, ExxonMobil has either maintained or grown its dividend thanks to its ability to do one thing that so few other companies in the oil and gas space seem to be able to do: Generate gobs of cash flow.
XOM Cash from Operations (Annual) data by YCharts
Just like those vintage bottles of Latour or Mouton-Rothschild, very rarely are you going to find a time when you can buy shares of ExxonMobil at a steep discount. Even with the average price for a barrel of crude down almost 60% since it's high in June of last year, shares of ExxonMobil have only dropped 14% from their 2014 highs. That doesn't mean its overpriced, though, because after sitting in your investment cellar for 20 years to 30 years, it will probably look like a great addition to the stock collection.