One of the major casualties in the recent commodity selloff is the oil-stock sector. Major oil players like Brazil's Petrobras, France's Total, and even giant ExxonMobil sunk to 52-week lows. Smaller, more volatile oil players fell 20% to 40%.
Energy stocks – whether they produce crude oil, natural gas, or a mixture of both – tend to move as a group. This makes the strength in natural gas royalty trusts all the more impressive. Like natural gas, these trusts held up just find during the brutal commodity selloff.
Several months ago, we pegged royalty trusts as our favorite way to play the "blown out" situation in natural gas. These trusts pay big dividends by selling a commodity that is already down in the dumps. One of the largest and most liquid of this group is San Juan Basin (SJT).
Remember… the energy sector was crushed this month. Many players hit fresh 52-week lows. And stocks in general got dumped with no regard to their underlying values. San Juan Basin and its fellow natty plays barely budged. Count this as bullish action for the trusts.
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