I heard a term today: “Stealth bear market,” and the energy sector is definitely experiencing one, but the recent drop in crude prices have pulled away the “stealthy” part. I cover the master limited partnership –MLP– type of companies that operate in the energy sector, and values have been hammered across the board, pointing to a fear driven sell-off that does not reflect the longer term prospects of these companies. If you own energy stocks, or are looking to get in near a bottom, the information presented here is very important.

Not Just Crude Prices

The best sign that energy MLPs are in a fear-driven bear market is the fact that almost all share prices are down a lot. In reality, there are many different subsectors in the energy space, and many will either not be affected by lower crude oil prices or even be more profitable with lower crude prices. In the first case, consider Williams Companies (NYSE:WMB) and Williams Partners LP (NYSE:WPZ). The Williams duo is almost entirely in the natural gas gathering, processing, and transporting business. No crude oil exposure at all. Yet, WMP is down 15% in the last month after rejecting a $64 per share buyout offer. In the second case, crude oil is falling, but you have probably noticed that fuel prices have not followed over the last month. This means that refiner profits are going to be high for Q2 and even higher when third quarter results are reported. CVR Refining LP (NYSE:CVRR) is an MLP that owns two Midwest refineries and pays a variable quarterly distribution based on profitability. CVRR is down 10% over the last three months, even though cash payments to investors should be 4% to 5% or higher for each of the next two quarterly payouts. These are just two examples of how investors can profit from the energy related sell-off, and in the rest of the article, I go over why there is a strong bull case for the oil sector in the long-term.

Crude Oil is Not a Global Business