This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Betting on the Energy Boom With Mutual Funds

Fidelity portfolio manager John Dowd is investing in companies that stand to benefit the most from the new shale fields. So far, margins of shale exploration and production companies have been skimpy, he says.

But Dowd argues that the weak showing is about to change because of declining costs. When shale development began several years ago, gas production outfits moved slowly, going through the expensive process of drilling a few individual wells. Gradually the number of wells increased, and producers began running massive operations that could deliver gas more efficiently.

As the facilities expanded, engineers have improved techniques through trial and error. All the efforts will soon result in healthy margins, says Dowd. "When the wells are extremely efficient, then the industry returns can be good," he says.

As an example of an efficient producer, Dowd cites Cabot Oil & Gas (COG - Get Report), a longtime holding of the fund. A leader in exploiting the Marcellus gas fields, Cabot managed to cut its costs sharply and improve profit margins even during times when gas prices were falling. "The productivity of their wells has been improving in virtually every quarter," he says.

Dowd also likes EOG Resources (EOG), which produces oil in the Eagle Ford shale region of Texas, and Pioneer Natural Resources (PXD), an oil producer in the Permian Basin of Texas.

David Ginther, portfolio manager of Ivy Energy, says that operators of pipelines stand to enjoy growing profits. Pipeline owners charge fixed fees based on the volume of the material they transport. As volume increases in the shale fields, the pipelines should report improved sales and profits. A favorite pipeline holding is MarkWest Energy Partners (MWE), a master limited partnership that yields 5.0%.

MarkWest is increasing its facilities in the fast-growing fields of the Marcellus region and the Utica shale fields that extend from New York through Pennsylvania and West Virginia. "The company is in the right areas," says Ginther.

At the time of publication, Luxenberg had no positions in securities mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
COG $28.73 -1.58%
AAPL $128.54 -0.63%
FB $80.90 1.63%
GOOG $573.37 -0.05%
TSLA $202.44 1.44%

Markets

DOW 18,096.90 -106.47 -0.58%
S&P 500 2,098.53 -9.25 -0.44%
NASDAQ 4,967.1410 -12.76 -0.26%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs