Royal Dutch Shell plc (ADR) (RDS.A), Alliance Resource Partners, L.P. (ARLP): These Stocks Are Better Than Treasuries

Page 1 of 2

“The U.S. Treasuries market could now be described as a Ponzi market” according to Hyman Minsky of asset manager Guggenheim Partners. Now is a good time to look at stocks with key resource assets.

Royal Dutch Shell plc (ADR) (NYSE:RDS.A)

Charles Ponzi

Ponzi schemes are named after Charles Ponzi and all follow a similar path. Money from new investors is used to help pay off old investors. While the schemes can work for a little while, they eventually fall under their own weight. Minsky compares U.S. Treasuries to a Ponzi scheme because “the only reason investors would buy Treasuries today is that they expect the Federal Reserve will buy them at higher prices in the future.”

If Minsky’s assessment is correct, assets of all types will feel the heat of an unraveling market. If the U.S. government’s ability to pay comes into question, then investors should strongly consider owning companies with real assets backing up their businesses. And, a focus on income-paying companies will help ease any near-term pain from volatile markets.

Oil and natural gas

Royal Dutch Shell plc (ADR) (NYSE:RDS.A) is one of the best options in the oil and natural gas space. It is a global giant with an internationally recognized brand and a breadth of product offerings that spans from the oil well to the gas pump. It competes with giants like Exxon Mobil Corporation (NYSE:XOM). However, Royal Dutch Shell plc (ADR) (NYSE:RDS.A)’s yield of around 5.3% is almost twice that of Exxon Mobil Corporation (NYSE:XOM).

Royal Dutch Shell plc (ADR) (NYSE:RDS.A)’s shares have been held back by difficulties in the company’s drilling efforts in Alaska and its big bet on U.S. natural gas. The drilling issue is industry wide, as companies have increasingly been forced into more dangerous environments to find resources. Weak U.S. natural gas prices, meanwhile, make the company’s large bet here look like a poor choice. That said, both Exxon Mobil Corporation (NYSE:XOM) and Royal Dutch Shell plc (ADR) (NYSE:RDS.A) expect gas to be a big business in the future, which could turn this negative into a positive over time.

Commodity prices make the top and bottom lines at Royal Dutch Shell plc (ADR) (NYSE:RDS.A) quite variable. However, it has a long history of regular, though not annual, dividend increases. Oil and natural gas will remain in demand no matter what happens to U.S. Treasuries.

A dirty fuel

Alliance Resource Partners, L.P. (NASDAQ:ARLP) is another good income option in the resource space. While investors might be put off because it is a coal miner, recent results should assuage any concerns.
Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

The 15 Most Murderous Countries in the World

10 Largest Colleges in the World: Bigger Isn’t Always Better

Comedians in Cars Getting Coffee: The 6 Comedians Seinfeld Needs to Interview

Easy Money: The 10 Most Successful Investors in the World Today

The 10 Most Deadly Diseases in the World Today

The 5 Most Expensive Luxury Motorhomes in the World

20 Largest Stock Exchanges in the World

6 Richest Painters In The World 2014

The 6 Countries with the Best Hospitals In The World

10 Largest Beer Brewing Companies in the World

The 10 Richest Fitness Gurus In the World to Pump You Up

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!