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Energy Stocks Remain Cheap

Written By Nick Hodge

Posted November 26, 2011

Energy stocks remain cheap.

They’ve actually been cheap for the past four years.

The iShares Dow Jones U.S. Energy ETF (NYSE: IYE) is trading 10% cheaper than it was this same week… in 2007.

The Dow itself is down a similar amount.

Four Year Energy vs. Dow

If you went long energy or the broad market four cranberry sauces ago, you probably feel like a turkey.

Of course, you could argue no money’s been made for an entire decade.

The Dow was trading at 11,500 in December of 1999. We’re precisely at that level this week — 12 years later.

Proof We’re Cheap Here

Louis Simpson just bought $2.7 million worth of Chesapeake Energy (NYSE: CHK). He bought 100,000 at $26.69 per share.

How do I know this?

Because Louis is a Director at Chesapeake, so his purchases are a matter of public record. This one was reported on November 8th.

You have to admit, Louis knows a bit more about Chesapeake’s prospects and the inner workings of the markets than you or I do…

He’s been a director of VeriSign (NASDAQ: VRSN) since 2005 and of SAIC (NYSE: SAI) since 2006. Before that, he served as CEO of Capital Operations at Geico from 1993 to 2010 and as Vice Chairman of the Board from 1985 to 1993.

All that inside information and insider connections… and he’s betting $2.7 million on a stalwart energy stock. He thought it was cheap at $26.69.

You can buy it today for less than $24.00 and get access to the Barnett Shale, Haynesville Shale, Fayetteville Shale, Marcellus Shale, and Eagle Ford Shale all at once.

And Mr. Simpson’s purchase isn’t an isolated occurrence.

William Hahne, Director at Whiting Petroleum (NYSE: WLL), recently purchased 2,000 shares at an average price of $48.49. With access to Colorado, the Gulf of Mexico, the Permian Basin and more, this stock was trading near $60.00 this summer.

You can pick it up today for less than Mr. Hahne paid.

Same goes for Schlumberger (NYSE: SLB). In late October, newly-appointed CEO Paal Kibsgaard bought 6,000 shares at $69.00 apiece.

You can get in cheaper than the man running the show at today’s price below $68.00.

The list goes on and on…

And with oil back up near triple digits, these stocks may not be this cheap for long.

That’s why we’ve prepared a special report to help you take advantage. It details three North American oil plays you should be eyeing up right now.

You can have a look at it here.

Call it like you see it,

Nick Hodge
Editor, Energy and Capital


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