Leading advisor Jack Adamo, editor of Insiders Plus, reports that a Goldman Sachs analyst has chosen one of the stocks on his newsletter's buy list -- ConocoPhillips (NYSE: COP) -- as his top pick in the energy sector.
"There was an extremely interesting piece recently in Barron's by the oil analyst at Goldman Sachs who predicted $100 oil back in late 2004. We'd been buying energy stocks for almost a year at that point, but, although I expected oil prices to rise, I had no idea they'd go this high.
"In any case, the analyst, whose name is Arjun Murti, said he expects oil to reach $150 to $200 sometime within the next 24 months. The low end of that range is only a Middle East incident away, but the high end still seems like a reach, especially given weakening economic conditions.
"Murti thinks that the higher prices will eventually rein in demand, and that oil will then sink to somewhere around $75, or even lower. Given the strong growth in consumption in developing nations, I doubt the world can wean itself from petroleum quickly enough to get oil to stay below $75 for long. Nonetheless, the guy has a track record, and his view merits attention.
"I don't think we need to change our investment approach any time soon, but, as always, I'll be on the lookout for signs of deteriorating fundamentals in the sector.
"Most interesting was that Murti's top pick for the entire sector, including every type of oil producer, driller, pipeline, etc., was our own Conoco-Phillips (NYSE: COP). He said it was cheapest, based on its assets, and that the huge gas fields it got from its purchase of Burlington Resources a few years ago, would start hitting the bottom line, now that natural gas prices have firmed.
"By the way, I was gratified to read that the joint venture between Conoco and Tyson Foods is already producing 300 to 500 barrels a day of diesel fuel from animal fats. It's a drop in the bucket in terms of our energy needs, but it's a start."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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