How to Find the Best Consumable Fuels Stocks
Consumable fuels companies tend to be cyclical stocks, which means that their fortunes rise and fall with the economy, along with demand for the products they produce. This makes it difficult to know when to buy. There are, however, some simpler ways to find good stocks.One of the best ways to find solid stocks is to find companies whose products are essential to modern life. Consumable fuels companies, of which there are several, fit that description. Beyond that, you want to look for companies with strong positions in their industry, as well as reasonable valuations. If you can find companies that check both of those boxes, you’re likely to find stocks that are less volatile and better able to withstand economic downturns.
Kinder Morgan Inc (KM)
Kinder Morgan Inc. is a giant in the oil and gas transportation industry. The company owns and operates a network of pipelines that crisscross North America, as well as several terminals that process, store and ship natural gas liquids (NGLs). With these assets, Kinder Morgan is able to move a wide variety of fossil fuels, including natural gas, crude oil, refined products and NGLs. The company’s massive network of pipelines gives it a strong position in the domestic market. It also gives Kinder Morgan access to lucrative international markets. The company’s Trans-Alaska pipeline, for example, sends crude oil from the North Slope to Valdez for shipment to Asia. In recent years, the company has been heavily focused on expanding its natural gas business. It has completed several major projects, including a natural gas liquids export facility in Louisiana, an expansion of its Trans-Tex Pipeline to Mexico and a natural gas pipeline in North Dakota.
Cheniere Energy Inc. (LNG)
Cheniere Energy is one of the largest developers of natural gas export facilities in the United States. The company’s two export terminals are located in Louisiana, where it receives gas from its own production facilities in nearby Texas. Once at the Louisiana terminals, the gas is liquefied using a process called cryogenic distillation. It is then loaded onto ships for export to countries such as Japan, China, India, South Korea, Taiwan and Brazil. Demand for natural gas is rising around the world, and Cheniere is well positioned to take advantage of this trend. The company has already exported more than 100 million tons of LNG, and its two terminals have the capacity to export nearly four times that amount. In addition to its export business, Cheniere owns a small but growing portfolio of gas-producing assets in the U.S. Gulf of Mexico.
BP plc. (BP)
BP is the world’s second-largest integrated oil and gas company. The company’s upstream operations include exploration, drilling, production and maintenance operations. Downstream operations include refining and marketing. BP is also one of the world’s largest energy trading companies, with operations in more than 50 countries. The company’s assets are mainly in the Middle East, Asia, the Americas and Europe. BP’s largest producing fields are the Sakhalin-I offshore field in Russian Far East, the Prudhoe Bay field in Alaska, the Urim fields in Oman, the Thunder Horse fields in the Gulf of Mexico and the Pembroke fields in the U.K. BP’s largest refining hubs are located in Whiting, Indiana, and Houston. BP also operates the Great Bitter Reef LNG terminal in South Texas and a number of smaller terminals. As one of the world’s largest oil and gas companies, BP has tremendous potential for growth. The company’s operations are well positioned to benefit from rising demand for energy, particularly in Asia. BP is also well positioned to benefit from the rise of renewable energy sources. The company has a growing renewable energy business and is one of the leading investors in the clean energy space.
Dominion Resources Inc. (D)
Dominion Resources Inc. is one of the largest producers of electricity in the U.S., mainly from coal-fired power plants. The company also derives a small amount of electricity from nuclear power plants and hydroelectric dams. Dominion’s business is divided into two segments. The regulated utility segment owns and operates power plants. The unregulated energy segment engages in natural gas production, power marketing, trading and transportation and energy services. Dominion also operates one of the largest natural gas pipelines in the Southeast that delivers gas to Virginia, Maryland, West Virginia and Pennsylvania. Dominion is also one of the largest electricity providers in Virginia, providing power to more than 1.5 million customers. The company’s assets are mainly located in the Southeast and Midwest. Dominion’s largest power plants are the Yorktown Power Station, the James River Power Station, the North Anna Power Station, the Chesterfield Power Station and the Virginia Electric Power Company Steam Station.
Concluding Words: The Bottom Line
Consumable fuels stocks generally have strong long-term potential, but they also have strong short-term potential. That’s because these stocks tend to rise and fall with the broader economy and with short-term trends in energy consumption. If you can find stocks that are insulated from these trends, though, you can benefit from the long-term growth of the industry even in the short term, when the stock might be relatively low. Consumable fuels stocks are cyclical, but there are some ways to find stocks that offer insulation from these trends.
Read More: Top Consumable Fuels Stocks to Buy Now and Hold