Two Energy Stocks for May
Stock trading and investing strategies keep evolving at certain months of the year because of the undulations of the financial year. This month of May requires a specific strategy.
Investors usually seem to follow the philosophy of selling in May. But Motley Fool analysts believe that this strategy would only prevent you from getting hold of some really promising stocks. They believe that May is a great month to buy some stocks and not miss out on some great options out therejust by sticking to the theory of selling in May. This year is no different, and these analysts believe that long term investors have some cool energy stocks to add to their portfolios. This could be the right time for it.
US Silica Holdings ($SLCA)
This sand supplier can capitalize on the hydraulic fracturing sand (frack sand) demand. This demand is always high, though the stock market has not always dealt favorably towards sand suppliers such as US Silica which is the most financially secure of these companies. That makes it trade very reasonably for 8.2 timesratio of enterprise value to EBITDA. Analyst Tyler Crowe reckons that the continuous demand makes US Silica an attractive proposition. The risk of the next oil price crash could be further detrimental to US Silica shares, but the company has now made an acquisition in the mineral mining industry that could help it diversify from just supplying frack sand.
Royal Dutch Shell ($RDS-A, $RDS-B)
Shell has a great dividend yield, in the region of 5.4%. And, the management is also taking steps to prepare for the future. Analyst John Bromels believes that these moves should pay off for in 5, 10 or 20 years’ time. The high oil prices now have caused the Shell stock to do well. Brent crude prices have been over $60 per barrel for over six months and rising too. The whole industry has benefited from this. But Shell’s cost-cutting measures during the downturn in oil prices has caused it to benefit more than most other oil companies. In Q1 2018, Shell’s latest quarter, the company’s net income had risen to $5.9 billion, a 66.7% year over year rise. And the company is also paying off its short-term debt.
Now the inevitable question is, what happens if the oil prices come down again? Shell has foreseen that and has moved further into liquefied natural gas. Analysts believe this market is set to grow faster than oil in the coming years. Then, even if oil prices come down, the company can remain afloat. Shell intends to get a share repurchase scheme started soon, so Bromelssays investors should buy into Shell before that happens.
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