In this issue:

The year’s midway point is a good time to take stock, and our performance review shows all three model portfolios outperforming the rallying energy sector on an annualized basis.

High energy prices should continue to support share prices in the coming months, but given the enthusiastic gains to date our updated Best Buys rankings emphasize financially conservative large caps with the scale to exploit new opportunities and the stability to ride out a correction in equities or commodities.

One company that did not make the updated list is former top choice Chicago Bridge and Iron (NYSE: CBI), as of now downgraded to a Hold on concerns over earnings transparency and management integrity. We’re holding on because these worries are likely to abate in the medium term, providing a more attractive exit price.

As the annual BP review of energy trends shows, global demand keeps growing, the more so now that US fuel consumption is starting to creep up again. That should set up more profit opportunities. But it would still be prudent to lower short-term expectations given the pace of recent gains.     

Portfolio Action Summary

• Chicago Bridge & Iron (NYSE: CBI) downgraded to Hold

• Schlumberger (NYSE: SLB) buy limit raised to $130 in Growth Portfolio

• EOG (NYSE: EOG) limit raised to $135 in Growth Portfolio

• ConocoPhillips (NYSE: COP) limit raised to $100 in Conservative Portfolio

• Energy Transfer Equity (NYSE: ETE) limit raised to $66 in Growth Portfolio

• Enterprise Products Partners (NYSE: EPD) limit raised to $85 in Conservative Portfolio

• Devon Energy (NYSE: DVN) limit raised to $90 in Growth Portfolio

• EQT (NYSE: EQT) limit raised to $120 in Growth Portfolio

• Jones Energy (NYSE: JONE) limit raised to $23 in Aggressive Portfolio

• Carrizo Oil & Gas (NASDAQ: CRZO) limit raised to $80 in Aggressive Portfolio

• Oasis Petroleum (NYSE: ESV) limit raised to $62 in Aggressive Portfolio

• SunEdison (NASDAQ: SUNE) limit raised to $25 in Aggressive Portfolio

• First Solar (Nasdaq: FSLR) upgraded to a buy below $77 in Growth Portfolio

• National Oilwell Varco (NYSE: NOV) limit lowered to $88 to adjust for recent spinoff.

• NOV, SLB, EOG, COP, ETE, EPD, DVN, EQT, JONE, CRZO, ESV, OAS, COG, SUNE, FSLR ranked as the new Best Buys, in that order

 Commodity Update

Brent crude prices pushed slightly higher amid ongoing concerns about the fighting in Iraq, but West Texas Intermediate (WTI) prices eased somewhat. This has slightly increased the Brent-WTI spread, which is one of the expected outcomes from unrest that could affect globally traded crudes like Brent. Over the past two weeks the front month contract of West Texas Intermediate (WTI) declined $0.58/bbl to $106.38 per barrel (bbl), while Brent traded up $1.75 at $114.77. The Brent-WTI spread is presently $8.39/bbl. The front month natural gas contract fell to $4.51 per million British thermal units (MMBtu), down $0.28/MMBtu from two weeks ago but still $0.70/MMBtu higher than the price a year ago. Natural gas in storage remains 33 percent below the five-year average for this time of year, and 29 percent below the level at this time last year.

In Other News

• Fighting in Iraq continues, with Sunni rebels declaring they have captured the country’s main oil refinery at Baiji, north of Baghdad

• The Obama Administration approved exports of minimally processed oil condensate for Pioneer Natural Resources (NYSE: PXD) and Enterprise Products Partners (NYSE: EPD). This is a move in the direction of loosening the restrictions on crude oil exports, and is bullish for oil and gas producers and mildly bearish for refiners

• North Dakota became only the fifth state in the nation to see its oil production climb above the 1 million barrel per day mark (Texas, Alaska, California and Louisiana have all produced above that mark, but only Texas is still doing so)

• BP (NYSE: BP) released its Statistical Review of World Energy 2014. We will take an in-depth look at this report in upcoming issues, starting today

• Tensions rose around a Chinese oil rig in the South China Sea in territorial waters claimed by both China and Vietnam. In the latest incident, China is accused of ramming and damaging a Vietnamese surveillance vessel sent to monitor China’s activities

• North Carolina, which ranked third in solar photovoltaic installations in 2013, landed a new three-site solar energy project that will be the largest east of the Mississippi. The total capacity of the three sites is projected at 52 megawatts