More Of The Best Energy “Stocks” To Buy Now!
More Of The Best Energy Stocks To Buy Now!
I don’t know about you, but I feel one the best investment ideas of early 2015 is to make smart bets that will benefit from an eventual price rebound in crude oil.
As you may already realize, the price of oil isn’t going to stay in the $50 range forever.
Late last week I revealed five oil stocks that should be at the top of your energy portfolio buy list. They all pay a dividend of at least 3% and have low debt/equity levels. It goes without saying, maintaining a conservative balance sheet is essential in today’s troubling crude price environment.
In case you missed it, the best individual oil stocks I recommend buying for an eventual rally in crude are:
- Exxon Mobil (XOM)
- Chevron (CVX)
- Occidental Petroleum (OXY)
- Conoco Philips (COP)
- Royal Dutch Shell (RDS.A)
As you can see, the stocks above are all major international players. And they’re one of the safest ways to invest for an eventual rebound in crude.
Of course, they’re not the only way…
There are hundreds of energy stocks that have the potential to rally dramatically when crude oil prices return to the $70 a barrel area or higher- something I expect to happen later this year.
But it turns out, some of best profit opportunities aren’t actually in stocks. Instead, they’re in exchange traded funds (ETFs).
Let me explain…
Diversification Is Key!
No doubt about it, the severe downturn in crude oil prices has hit the US oil exploration industry hard. As I explained here, some of the top shale drillers in the US have been brought to their knees in recent months.
So while there’s opportunity to profit off a crude rebound you have to very careful.
The market is awash with financially stressed oil companies. If the price of crude stays low for an extended length of time, many producers will find themselves in a tough financial position.
That’s why as an energy investor, it’s essential to diversify…
The last thing you want to do is throw all your capital into one oil stock and pray for a rebound.
As you may know, ETFs are a great way to diversify any portfolio. Since ETFs hold a basket of stocks directed towards a certain industry, you can capitalize off industry trends without subjecting your portfolio to excessive one-stock risk.
Three Energy ETFs To Benefit From A Rebound In Crude Oil…
There are actually quite a few ETFs geared towards energy. But the ones below are by far the best, and safest, way to capitalize off an eventual rebound in crude prices.
Energy Select Sector SPDR (XLE) – This is the top dog of energy ETFs. It has total net assets of $12.6 billion and holds 45 of the best mid- and large-cap energy stocks the market has to offer- all of which will benefit from rising oil prices.
Some of the names held in XLE include Pioneer Natural Resources (PXD), Halliburton (HAL), and Devon Energy (DVN).
Not only is XLE a great way to diversify, it pays a solid 2.4% dividend as well!
Speaking of getting paid to wait…
Alerian MLP ETF (AMLP) – Another casualty of the recent oil downturn is the energy infrastructure industry. As you may know, oil and gas pipelines crisscross the US, delivering energy in a relatively safe and efficient manner.
But when the bottom fell out of the crude market, investors worried the high-debt profile of the infrastructure industry would present problems. As a result, top industry names like Plains All American Pipeline (PAA) and ONEOK Partners (OKS) suffered swift price downturns.
But here’s the deal…
While the energy infrastructure industry is experiencing financial stress, buying a diversified piece of the industry is a very smart move right now. In the long run, this industry will thrive. After all, there’s no better way to transport oil and natural gas than by pipeline.
AMLP is one of the best ways to accomplish this goal…
The ETF holds 24 top pipeline names including Enterprise Product Partners (EPD), Magellan Midstream Partners (MMP), and Energy Transfer Partners (ETP).
And did I mention, AMLP pays a juicy 6.9% dividend?
Without a doubt, this is one of the best ways to get paid to wait for a crude oil rebound.
And last but not least…
SPDR S&P Oil & Gas Exploration and Production ETF (XOP) – Since XOP is geared towards smaller oil and gas exploration companies, it suffered the biggest 6-month downturn of all the ETFs mentioned in this article.
But that means XOP also has the best chance of outsized capital gains when crude rebounds.
You see, XOP holds 83 small- and mid-cap oil and gas exploration companies and has total net assets of $1.5 billion. Some of XOP’s holding include Penn Virginia (PVA), Carrizo Oil & Gas (CRZO), and Northern Oil and Gas (NOG).
While XOP only pays a 1.5% dividend, it’s your safest shot at big capital gains when the price of crude oil recovers to $70 a barrel or higher.
Buying The Best Energy Stocks Is Easy With ETFs
As you can see, there’s ample opportunity in the oil and gas industry right now.
Using the ETFs above, long-term investors can collect undervalued assets that are virtually guaranteed to rise along with the price of crude. And the best part is, you get instant diversification along with a healthy dividend.
I don’t know about you, but the energy ETFs above are a no brainer in my book!
Until Next Time,
Justin Bennett
BIO: Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com. With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them. Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.
Category: Energy, Natural Resource Stocks
