Economic Growth Shows Value of Energy...
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Ida Hansen
Economic Growth Shows Value of Energy Sector
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Many previous articles on this site have focused on the value of oil and natural gas stocks, no matter the size.  Recent economic growth data from the United States is showing, yet again, the appeal of equities in this sector from global players such as Royal Dutch Shell (NYSE: RDS-A) and ConocoPhillips (NYSE: COP) to small caps that have the potential to punch above their weight class due to holdings with great potential, like Americas Petrogas (OTC: APEOF) and Octagon 88 (OTC: OCTX).

The U.S. Bureau of Labor Statistics just reported for November that payrolls increased by 203,000 in November.  That topped analyst predictions of 180,000. In a related statistic, the November unemployment rate fell to 7 percent.  That is the lowest figure in half a decade.  Again, that was better news than analysts were expecting.  The unemployment rate was expected to be 7.2 percent.

As the United States uses more energy than any other country, that is very bullish for stocks such as Royal Dutch Shell, ConocoPhillips, Octagon 88, and Americas Petrogas.  Higher economic increases the demand for oil and natural gas to run the factories and the farms of the American economy.  With more working, the consumer demand for energy is greater, too.

It does not matter where each is headquartered: Royal Dutch Shell is from The Netherlands, Octagon 88 is Swiss, ConocoPhillips is based in Houston, and Americas Petrogas is headquartered in Calgary, the Houston of Canada.  Those operating in North America have uniques advantages, as reported in a recent article in National Geographic.  All benefit from economic growth in the United States as it increases the demand for energy.  That is no surprise: basis supply and demand forces at work for a commodity.

What is also no surprise is that the global need for oil will continue to increase significantly.

That, too, places a premium on oil and natural gas stocks.  For all of its appeal, the alternative energy sector is nowhere close to contributing substantially to meeting energy needs around the world,  The future for coal is certainly not promising.  More utilities are using natural gas rather than coal due to the lower cost and lower emissions into the atmosphere.

That is all very bullish for the present shareholders and future stock price of Americas Petrogas, Octagon 88, ConocoPhillips, Royal Dutch Shell and others in the oil and natural gas sector.  For income investors, ConocoPhillips and Royal Dutch Shell have high dividend yields.  The potential of Octagon 88 and Americas Petrogas due to the holdings of each should entice growth and value investors.   Production and revenue is increasing for Americas Petrogas.  Octagon 88 is moving to begin production, which should be bullish for the stock.

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