Hugoton Royalty Trust (HGT)

Natural gas royalty trusts may be the best way to play the current natural gas boom. As natural gas is very volatile, playing the etf may not be easy to stomach for those of you that grasp each penny with both hands. Don’t fret if that is your way, as it is a good quality. The more you lose when you get started, the harder it is to make the money back. Hugoton Royalty Trust was created when XTO, conveyed 80% of net profits from property in Kansas, Wyoming and Oklahoma to the trust. I am bullish this stock as I am any in the space. If we look at this group of stocks, we see a very bullish movement. My last call one week ago on SJT has seen a 6% increase since that time. http://www.updown.com/displayStockPick.do?stock_pick_key=18201





I think many have a top placed in natural gas, just like they are saying with oil. My justification to be bullish natural gas is different than oil. First look at the chart and fundamentals. When compared to oil historically natural gas is still low, plus the fundamentals for oil going higher over the next couple of years are still good, even if there is a sharp pullback in price after the driving season this year. When compared on a chart to MTR, SBR and SJT we see all of them following the same pattern. They are all moving quickly to find new highs and I think this is an indication to be bullish for at least a few more weeks.





This group is also showing great profits for the first quarter of 2008. If we look at HGT’s 2008 first quarter report, we see that year over year, quarterly net profits income increased from $16.7 million to $22 million. Almost all of this was realized through higher oil and natural gas pricing and volumes. Distributable income per unit increased from .406057 to .544229. Natural gas sales volumes were up 1% while oil was an increase of 9%. Natural gas pricing increased 9% and Oil increased 65% year over year for the first quarter.





This is another stock that has an impressive chart. After almost 2 years of staying within the same trading range, the stock had a triple top breakout on April 22nd. The current trend places a price objective of $37. There will not be major resistance until around the $40 range and I believe you can own this stock safely through this point. I would not sell if you are looking for a good long term play in this sector. Look for the stock to continue to head upward through 2008.