In this issue:

If you only buy stocks when they are popular, the returns are likely to prove otherwise. The time to strike is when fear rules and has temporarily obscured attractive long-term fundamentals.

Yet there’s not much fear left in this aging bull market, and certainly not among energy stocks, which have become a leading sector this year. The offshore drilling group stands out as an exception to the rule amid a downturn in demand and rates, as oil majors try to wait out an apparent glut of rigs old and new in hopes of securing lower prices.

But waiting too long will ultimately mean losing production, as aging land wells gradually deplete and are not replaced with sufficient new shale or offshore output. That imperative should ultimately make the current downturn in rates relatively shallow, lifting the recently battered shares of offshore rig suppliers.

Seadrill (NYSE: SDRL) has the industry’s newest fleet and has been very good to our Aggressive Portfolio over the years. But it is an aggressively leveraged company, and this week we’re adding two new offshore drilling plays suitable for more conservative investors.

As for developments onshore, we cover the recent hype about how shale is all hype because of downward revisions in the resource estimate for the Monterey Shale, which is a footnote in the scheme of current domestic energy production. Meanwhile, it’s instructive to look at the basins that are actually driving this boom, such as leading crude growth play Eagle Ford down in south Texas.

The chart below is from the US Energy Information Administration’s annual long-term outlook issued earlier this month, and shows that in just a year the agency’s estimate of the peak production rate the Eagle Ford is likely to deliver in the second half of this decade has doubled.

That’s much more relevant to US shale prospects than any bookkeeping change for the Monterey. In addition to debunking the notion that the shale boom is spent, Robert sorts through the claims and counterclaims about the real and imagined hazards of hydraulic fracturing.

As it happens, another of this week’s picks is growing rapidly by mastering improved fracking techniques in the Eagle Ford. It’s gunning for a 70 percent increase in its crude output this year. We prefer to invest on the basis of strong corporate fundamentals such as these rather than conclusion-jumping, click-baiting headlines.

Portfolio Action Summary

• Ensco (NYSE: ESV) added to the Conservative Portfolio. Buy below $65

• National Oilwell Varco (NYSE: NOV) added to the Conservative Portfolio. Buy below $96

• Penn Virginia (NYSE: PVA) added to the Growth Portfolio. Buy below $20

Commodity Update

Crude prices gained strength over the past two weeks. The front month contract of West Texas Intermediate (WTI) traded Tuesday at $104.22 per barrel (bbl), up $2.37 over our previous report, while Brent traded up $1.05 at $110.29. The Brent-WTI spread is presently $6.07/bbl. The front month natural gas contract traded Tuesday at $4.48 per million British thermal units (MMBtu), which is $0.11/MMBtu higher than two weeks ago and $0.40/MMBtu higher than the price a year ago.