Should I Buy Energy Stocks Now? What $100 Oil Really Means for Your Portfolio

Justin Klein (0:00)

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SPEAKER_2 (1:21)

This is Invest Talk from KPP Financial, helping investors make sense of the markets one day at a time. Here's your host, Justin Klein.

Justin Klein (1:37)

Good afternoon, fellow investors, and welcome back to another edition of Invest Talk. This is our Thursday, September 17th, 2020-2026, and we are excited for you. Whatever's on your mind, we're here to help you become a better investor. As usual this hour, we do our very best to make it productive for all of us, give you insights into what's going on in the market, different sectors, hopefully impart some lessons that you can take back to your own personal situation and make better decisions with your money.

Being better able to weigh risk versus reward, to identify opportunity in potential pitfalls that are out there in the markets, not just today, but in future years as well. So it's not just about that one tip or that one call about a particular stock, even though we love all your calls, whether it's about individual stock or something more broad, we love it all. But that's not what the show is about. It's how you use those moments to teach lessons. And so we're going to do that throughout the hour. So we're ready for your calls at 888-99-SHARP. But a quick heads up before we move on, mark your calendars, October 24th to Saturday. You are invited to join the KPP team and guest experts for our in-person retirement summit. Special event is free of charge, but seating is limited and you must pre-register over at investtalk.com. What are we gonna go over? Luke's gonna speak on the investment side, current conditions, how to think about income, and overall investment allocation, especially pre and post-retirement.

I'm gonna go over, well, let me say this. We have a tax expert that's coming in, we have a trust expert to really help you understand what pitfalls are out there within your trust potentially that could cause problems in latter years. And then we have a real estate expert talking about what's going on with the current market, how to think about downsizing potentially in retirement, how that fits in to your broader plan, which is what I will be speaking about. So we have five different speakers, two of them are internally at KPP, myself and Luke, and then we have three guest experts. So it's gonna be really fun, really interesting, and hope to see all of you there. But once again, seating is limited, so head over to investtalk.com. Now in just a bit, I'm gonna talk about today's marked performance and run down the show topics. But as usual, we'll tackle this first caller question now.

James (4:12)

Hi, this is James from California. I have a question on NRG.

It's an energy company. Do you think it would be a good investment in the long haul, five to 10 years, or dividends and growth? Thank you.

Justin Klein (4:28)

All right, looking at energy, NRG, NRG energies. It sounds weird, but the letter N, the letter R, and the letter G, NRG, Energy, Incorporated, and the simplest, Energy. Now, earnings are expected to go up 10% this year and 25% next year, but the stock is in a strong downtrend.

Its relative strength is 12

So for the past year, it's done pretty miserably despite earnings growth. Now, what do they do? You said it's an energy company, that's in the name, but really it's a utility company. That's what it is. It's an electric and natural gas utility operating in Texas, mainly. What else does it do? Yeah, plants. I'm just looking at its operations.

It does have maybe some green energy exposure here. The problem is debt. And that's my issue is I don't like the level of debt that's on the balance sheet. Free cash flow is positive. That is a good thing, but it's kind of rolled over. It's been rather weak over the past five years or so, pretty volatile. So of the utility names, this is not the one that I would get excited about.