As I indicated two weeks ago, I am cleaning up and condensing the portfolios for The Energy Strategist. This week I am converting the Holds from the portfolios to either Buys or Sells. Today I am changing advice for ten portfolio holdings. 

I provide a brief rationale in each case but keep in mind that you may have particular circumstances that could influence you to keep some of these companies in your individual portfolio.

Energy Strategist Portfolio Update

• Antero Resources (NYSE: AR) downgraded to Sell 
• Delek Logistics Partners LP (NYSE: DKL) downgraded to Sell
• JinkoSolar Holding Co. (NYSE: JKS) downgraded to Sell
• Kinder Morgan Inc. (NYSE: KMI) downgraded to Sell
• NuStar Energy (NYSE: NS) downgraded to Sell
• NuStar GP Holdings (NYSE: NSH) downgraded to Sell
• SemGroup Corp (NYSE: SEMG) downgraded to Sell
• TransCanada Corporation (NYSE: TRP) downgraded to Sell
• Alliance Resource Partners (NASDAQ: ARLP) upgraded to Buy below $22
• Alliance Holdings (NASDAQ: AHGP) upgraded to Buy below $28

Trade Rationale

Antero Resources (NYSE: AR) has essentially gone nowhere in recent years. Although some of its metrics are improving, I believe there are two Appalachian Basin competitors with better outlooks in the portfolio. Sell Antero Resources.   

Delek Logistics Partners LP (NYSE: DKL) hasn’t been a terrible performer since being added to the Conservative Portfolio in 2014. So far this year it has nearly a 17% total return, handily outperforming the S&P 500. The only issue is that I think it’s the 2nd best refinery logistics MLP in the portfolio. Sell Delek Logistics LP.

Regardless of the direction of U.S. energy policy, solar power still has a great long-term future. Likewise, coal’s future is one of inevitable decline. But over the next four years, solar won’t grow quite as quickly as it would have given the direction of energy policy under Donald Trump, and coal won’t decline as quickly as anticipated. Therefore, I am trimming the solar holdings, and moving a pair of coal MLPs back into the Buy column.

The portfolio has three solar power holdings (one of which is the top overall portfolio performer for 2017), but I am cutting that back to two. Chinese solar manufacturer JinkoSolar Holding Co. (NYSE: JKS) is up 8.8% on the year, but it has performed poorly overall since being added to the Aggressive Portfolio in 2014. Sell JinkoSolar. 

On the other hand, Aggressive Portfolio recommendations Alliance Resource Partners (NASDAQ: ARLP) and Alliance Holdings GP (NASDAQ: AHGP) have been excellent for subscribers. We recommended them on June 14 last year, and on October 7 – ahead of an election we thought Hillary Clinton would win – we recommended subscribers sell half of their positions. At that time, in under four months, ARLP had returned 55% and AHGP 44%. I think both can continue to deliver solid yields to investors for years, but I am setting tight limits on each. If you don’t get them below the Buy limit, don’t chase them. Exercise discipline and wait. Buy ARLP below $22 and AHGP below $28.

Kinder Morgan Inc. (NYSE: KMI) made a strong recovery over the past year, up 26% from the meltdown that played out in 2015. However, it is presently trading about where it should be given its financial metrics, and with a yield of only 2.3% (which in fairness will probably increase this year), there doesn’t look to be a whole lot of upside in the near-term. There are better options in the pipeline space. On the other hand, if you want a midstream company that isn’t an MLP in your portfolio, you may want to consider keeping it because there aren’t many options like that, particularly of the size and scope of Kinder Morgan. Sell Kinder Morgan.

NuStar Energy (NYSE: NS) and NuStar GP Holdings (NYSE: NSH) are at about the same price they were when they were added to the portfolios in 2015, but it has been a wild ride. They both suffered steep declines in 2015 and early 2016, but over the past year, NS and NSH are both up over 30%. Investors also collected a yield of ~8% over the past two years, so they weren’t terrible picks, especially considering the market conditions. In hindsight, they didn’t perform up to expectations, though, so it’s time to trim them. Sell NuStar Energy and NuStar GP Holdings.

SemGroup Corp (NYSE: SEMG) has been up and down since we added it to the Growth Portfolio in 2014. This Tulsa-based midstream was up 20% within a couple of months of being added, but then it was back down, up again, and then had a dismal 2015 along with most of the sector. But then it bounced back in 2016, and after a total return of 76% over the past year, I think most of the upside is gone. SemGroup is still a quality midstream company, but it’s competing with several others for portfolio space. Sell SemGroup Corp.

In 2016 TransCanada Corporation (NYSE: TRP) mostly recovered from the slide it also endured in 2015. Over the past year, TransCanada has a total shareholder return of 22%. The company has a long track record of growing distributions by 5% to 10% year after year. You could probably hold TransCanada and get a relatively safe 4% yield for many years. But, like Kinder Morgan, TransCanada seems fairly valued, without tremendous upside and with assets that aren’t as strategically located as some of the other companies in the portfolio. Sell TransCanada.

I will convert the remaining half dozen or so Holds to Buys and provide updated targets in the next article.