Energy
Monday, June 13th, 2022 6:11 pm EDT
We’re buying 25 shares of Pioneer Natural Resources (PXD) at roughly $264.17 each. Following Monday’s trade, the portfolio will own 175 shares of PXD — increasing its weighting to 1.66% from 1.42%. In Monday’s “Morning Meeting” livestream for Club members, we highlighted energy as our next group of interest after buying in health care with an add to our Johnson & Johnson (JNJ) holding. We are following up Monday afternoon by adding to our Pioneer Natural Resources position. Monday’s sell-off in energy stocks — which has been the best performing sector year to date — represents an opportunity to get bigger in our favorite names. We continue to find the energy complex attractive, in general due, to supply and demand dynamics and the resilience of oil and natural gas pricing. Oil simply refuses to stay down for long. Take Monday for example: Earlier this morning, West Texas Intermediate crude dipped to around $118 per barrel due to recession fears. However, the selling was only temporary, and the American oil benchmark turned positive late in New York trading, pushing above $121 per barrel, with concerns about tight supply winning out over an economic-driven demand slowdown. Pioneer is uniquely positioned to be an outsized beneficiary of higher oil prices thanks to management putting zero hedges on the books this year. That means they have not capped the upside to realized prices, paving the way for significant free cash flow generation through the rest of the year. This PXD purchase fits our theme of buying stocks of profitable companies with great balance sheets and return cash to shareholders. If you annualize Pioneer’s most recent base plus variable quarterly dividend of $7.38 per share, the dividend yield at the current share price would be about 11.2%. We believe investors should prioritize cash flow generating, dividend paying stocks to combat the current inflationary environment, and PXD has the highest dividend yield in the S & P 500. The company also has a $4 billion share repurchase program in place. Only $250 million of it was utilized in the first quarter. (Jim Cramer’s Charitable Trust is long PDX and JNJ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
