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Filed under: Newsletters, Canada, Commodities, Oil, Stocks to Buy

Filed under: International Markets, Newsletters, Canada, Commodities, Oil, Stocks to Buy

The editor of The High Income Alert explains, "So today, we're returning to a Canadian energy trust by purchasing an issue that we've traded profitably before: Penn West Energy Trust (PWE), an actively managed trust with a large and diversified asset portfolio, experienced technical teams and a strong balance sheet.

Jim Kingsdale wrote an article on Seeking Alpha yesterday entitled "A Case For Retreating From Oil Investments." I wrote the following piece in the Comments section, but have decided to submit it as a complete article as well. I have been bullish on oil and gas for more than a year, beginning well before oil crossed $100, and I remain so today. Although I have been bullish on oil, I never called for oil to hit $150 this year, or, perish the thought, $200.

In his always-fascinating Validea newsletter, John Reese assesses stocks based on the investment criteria used by numerous "legendary" investors.

For a recent new recommendation, he explains, "Repsol (NYSE: REP), the Spain-based integrated oil company, gets approval from my Guru Strategies based on both Peter Lynch and James O'Shaughnessy."

"My Lynch-based model considers Repsol to be a "stalwart", because of its high annual sales of $87.2 billion and moderate 12.09% growth rate (based on the average of the three-, four-, and five-year earnings per share figures). 

On Friday, I was about to write that it appears the continuing bad news makes me want to just go sit in the sidelines and wait for better days. The housing down turn is turning into a 4 year odyssey of pain for homeowners. Gas prices are causing SUV owners to trade in for Vespas. The recession that has been forecast by many actually appears to be arriving.

Folks who have read my articles on this site know that I don’t usually set price targets on stocks that I like. <!---->However, the current circumstances pertaining to Penn West (PWE) requires that an exception be made to this rule.

Penn West (PWE) is North America's largest oil and gas royalty trust, and belongs in a group of Canadian companies ("Canroys") that pay a large percentage of their cash flow in the form of dividends to their "shareholders" (who are actually called unitholders). Although various Canroys are active in different businesses, PWE is an upstream oil and gas company with just a little bit more oil operations than gas.I believe that PWE offers compelling value that is largely UNappreciated by investors. <!--more-->

In a previous article (Outrageous Opportunities in Upstream MLPs), I discussed high-yield opportunities in upstream MLPs, comparing them to Canadian Royalty Trusts (Canroys). <!--more-->Even after recovering from recent lows, both sectors feature tantalizingly high distributions:

Master Limited Partnership

Have you ever stopped to wonder how much you are paying for energy, not per liter, not per kilowatt hour, but in MBTU (Million British Thermal Unit). By converting the price of gasoline, electricity and natural gas into $/Million British Thermal Unit I’ve discovered some interesting statistics which have interesting investment themes. Using some simple high school mathematics I’ve calculated the cost of different types of energy forms.

As a Canadian living in Ontario I pay the following prices for retail electricity, natural gas and gasoline:

Richard Lehmann, editor of Forbes/Lehmann Income Securities Investor, advises taking advantage of depressed prices in Canadian energy trusts. These trusts may face higher taxes in 2011, but until then, Lehmann advises collecting the double-digit percentage yield.