In this issue:  

Energy stocks have been red-hot of late, leading the stock market toward new records even as surging domestic production adds to the crude glut on the Gulf Coast. We’re taking the opportunity to book partial profits in four drillers while raising targets on two refiners likely to benefit from cheaper feedstocks in the near future.

The willingness to sell the market darlings and buy its outcasts has served us well in our personal investing. This week Robert shares insights into his personal account’s four top energy holdings, including three that have made money for subscribers, and discusses his enviably farsighted investment philosophy.

In addition to the crude refiners, the domestic energy revival is also benefiting the natural gas liquids processors converting NGLs into liquefied petroleum gas for export. We’re reprising a survey of this lucrative business from the most recent issue of MLP Profits, because many of the leading players also feature prominently among this newsletter’s Best Buys. MLP Profits, put out by the same team that manages The Energy Strategist, has seriously outperformed the MLP sector over the past year, and if you are interested in tax-deferred income you should give it a try. We’ll steer you past the crowd favorites  to the investments delivering long-term value.     

Portfolio Action Summary

• Continental Resources (NYSE: CLR) position cut in half in the Aggressive Portfolio

• Gastar Exploration (NYSE: GST)  position cut in half in the Aggressive Portfolio

• Whiting Petroleum (NYSE: WLL)  position cut in half in the Growth Portfolio

• WPX Energy (NYSE: WPX) position cut in half in the Growth Portfolio

• Marathon Petroleum (NYSE: MPC) buy below target raised to $95 in Aggressive Portfolio

• Valero Energy (NYSE: VLO) buy below target raised to $63 in Growth Portfolio

Commodity Update

The front month (May) contract of West Texas Intermediate (WTI) rose $0.53 per barrel from our previous report to $101.77/bbl. Brent traded up $2.53/bbl to $108.83. The Brent-WTI spread rose slightly to $7.06/bbl. The front month natural gas contract traded Wednesday at $4.76/MMBtu, which is up $0.22 from two weeks ago, and $0.49/MMBtu higher than the price a year ago. I will repeat that most natural gas producers should turn in better results versus a year ago throughout 2014, and natural gas companies have begun to see their share prices climb.

In Other News

• In a move that shouldn’t surprise anyone, the Obama Administration has once more kicked the can down the road by saying it can’t make a decision on the Keystone XL pipeline until after the November elections.

• Spring means higher gasoline prices because of the changeover to summer blends. The average US price of gasoline rose 9 cents a gallon in the past two weeks, and has risen over 40 cents over 10 weeks.

• Deutsche Bank raised its price targets on seven oilfield services firms, citing the strength of a cyclical recovery in North America. Firms upgraded included Growth Portfolio holding Schlumberger (NYSE: SLB).

• A new study paid for by the federal government and released in the peer-reviewed journal Nature Climate Change concludes that biofuels made with corn residue release 7 percent more greenhouse gases in the early years compared with conventional gasoline.

• Oil companies in North Dakota are opposed to a proposal that would force the industry to slow down oil production in an effort to cut down on the flaring of natural gas.