From driving to home heating, consumers are benefiting directly from reduced energy prices, but shareholders of companies involved in producing and delivering liquid fuels are feeling the pinch.
In The Times-Tribune survey of publicly traded companies with a significant presence in Northeast Pennsylvania, natural gas and natural gas transportation companies comprised four of the five poorest performers — the laggards.
The crop of leaders were topped by Amazon.com, which continues its dominance of online retail as its shares gained even in a falling market for equities overall. They were joined by electric and water utilities, a defense contractor and consumer goods among the leaders.
The third quarter was a down one for equities, with the Dow Jones industrial average giving up 7.6 percent of its value. The tech-heavy Nasdaq lost 7.4 percent and the S&P 500 was down 7 percent. Of the 73 company’s followed by BusinessWeekly, shares in 40 of them beat the Dow. One third of the stocks added value for the quarter.
The collapse of energy prices topped the market news. A barrel of oil cost half what it had in 2014 and exploration and production companies at work in the Marcellus Shale are effected by oil price. Natural gas prices continued to bounce near decade-long lows, with the U.S. Energy Information Administration projecting bulging supplies and declining demand even as U.S. drillers produce as much as they ever have been.
“This industry is based entirely on the value of the commodity,” said Bryan Kupchik, of Capstone Wealth Management Group in Clarks Green. “This is what happens when the value of that commodity falls.”
Uncertainty about interest rates fuels the downgrades of the highly leveraged industry. Mr. Kupchik predicts some companies will fold, selling out to competitors.
A recent survey showed more than four in 10 U.S. shoppers go directly to Amazon when looking to buy something, speaking to its success in becoming synonymous with online shopping and competition for Google in product searches. The company’s stock value increase 18 percent.
“Amazon has been given a pass by investors for not focusing on earning or dividends, and investing money back into the company or on acquisitions,” Mr. Kupchik said. “But they are a behemoth and the stock has been amazing, demanding an insanely high price-to-earnings ratio.”
Other top performers included the utility-focused American Water Works Co. and PPL Corp., which gained 14 and 13 percent, respectively. With equities markets shaken, it’s not a surprise.
“Utilities are perceived as safer and more stable,” Mr. Kupchik said.
While speculation about the Federal Reserve Bank raising interest rates shook the confidence in debt-heavy utilities, investors turned back to them when it became clear the Fed would not move immediately.
This article was written by David Falchek from The Times-Tribune, Scranton, Pa. and was legally licensed through the NewsCred publisher network.