Bold Prediction: Oil to Top $120 Soon
Energy stocks have been one of the market’s best-performing sectors over the past few months, gaining nearly 16% since the April low.
It’s easy to see why.
A new embargo against Iranian oil exports is supporting crude prices.
In fact, Merrill Lynch analysts believe that a complete cutoff of Iranian crude supplies could result in an epic oil price spike above $120 a barrel, up from just $67 today, because global inventories are tight as a drum.
That means a lot more upside for energy stocks from here. Add in the fact that the oil and gas industry is still down more than 50% from its highs in 2014 and you have all the reason you need to buy in on energy plays.
And sure enough, we’re seeing this rising tide take its effect right now. Check out the chart for the iShares Dow Jones U.S. Energy Sector Index ETF (IYE) over the past six months:
After February’s pullback, IYE has recovered very nicely. And I expect things to only get better.
I also see two excellent ways to play the upside breakout in energy shares.
First up is the obvious one.
The iShares Dow Jones U.S. Energy Sector Index ETF (NYSE: IYE). This ETF spreads your money across some of the best energy plays around.
Plus, as an ETF, your shares in IYE help protect you from the wild swings a single stock could see that could crush your portfolio.
IYE’s dividend isn’t too shabby, either. The current yield is 2.26% and the annualized payout sits at $0.94 per share, according to Dividend.com.
Add in the fact that IYE is still trading at 5% off its 52-week high and you have all the reasons you need to take swing at this ETF.
Another play I like that will help you capture this surge in energy stocks is Continental Resources (NYSE: CLR).
Continental Resources is an American petroleum and natural gas exploration and production company based in Oklahoma City. We first featured them to followers of Wealth Watch on March 29 of this year.
Since then the stock has risen from $58.95 to where it sits today at $63.77. Over an 8% gain in a few months. Here’s the six-month chart:
Currently, CLR is trading at over a 7% discount from its 52-week high, and I firmly believe with a run-up in oil and gas prices there could be more outsized gains ahead for this stock.
Bottom line: The rally in energy stocks is just getting started. Don’t miss out on a gusher of profit potential.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch