The holiday season is heating up, while temperatures are dropping. Winter is well under way!
What better way to celebrate the season than to take a look at an industry we’re putting to good use this time of year: Energy. The energy sector is full of companies working to provide consumers and business with electricity, fuel, heat and many other services we put to constant use.
The energy sector gives investors a variety of options to put money into. Whether you’re interested in traditional oil and drilling companies, businesses dedicated to solar and other alternative energy sources or the corporations that provide energy equipment, there are stocks for every taste. So today we’ll see how the sector is performing as a whole, and I’ll share with you some of the best and worst energy plays on the market.
Let’s go ahead and see if the energy sector is helping warm up portfolios or burning investors.
Proceed With Caution
The energy sector can be a volatile place, as we all should be aware of after all the fluctuations it experienced this year. Surging and dropping oil prices, changes to federal regulations, availability and so many other factors may affect how the entire sector, not just a stock or two, perform.
The ishares Dow Jones U.S. Energy Sector Fund (IYE) tracks the performance of 99 major energy stocks in the U.S. IYE is actually up 20% for the year, but it has been trending downward over the past month. Meanwhile, the ishares S&P Global Energy Sector Fund (IXC) is up just 10% so far for the year. This fund, which also contains 99 holdings from all over the world, provides perhaps the best view of how the energy sector is faring on the global level. It has also fallen in the past month.
The energy sector is starting to take on water. The fact is that crude oil prices are now at the lowest level in about six months. The U.S. Energy Information Administration reported that crude oil supplies have risen for 10 straight weeks and this put downward pressure on prices. Meanwhile, the six-month nuclear pact with Iran caused the U.S. to unfreeze $8 billion in Iran assets recent. With the prospect of Iranian oil more easily hitting world markets, the increased U.S. crude oil production from the fracking boom, plus a glut of refined gasoline and diesel, the prices at the pump are expected to continue to meander lower.
My Top Energy Pick
That said, you should be careful when investing in oil or natural gas companies due to the glut piling up in the U.S. right now. The good news is, despite the volatility that’s inevitable in this sector, there are always pockets of strong companies that perform well no matter the industry conditions.
One such company is Core Laboratories (CLB), a company in the Netherlands that helps the oil and gas recovery. And right now, Core Laboratories’ services are in hot demand because oil companies are having difficulties extracting gas from traditional deposits and are now being forced to look to alternative sources and methods of extraction. Whether it’s fracking or oil recovery techniques, Core Laboratories does it all, including reservoir description, production enhancement and reservoir management services.
In my opinion, this is one of the safest energy plays out there right now. CLB is an A-rated buy.
30 Energy Stocks To Sell
But for every Core Laboratories out there, there are dozens of other energy stocks that you should steer clear of. To get you started, here are the Top 30 big-name energy stocks that have become too hot to handle.
|Company Name||Quantitative Grade||Fundamental Grade||Total Grade|
|APC||Anadarko Petroleum Corporation||D||C||D|
|BHI||Baker Hughes Incorporated||D||C||D|
|CAM||Cameron International Corporation||F||C||D|
|CVE||Cenovus Energy Inc.||F||C||F|
|DVN||Devon Energy Corporation||F||C||D|
|FTI||FMC Technologies, Inc.||F||C||D|
|IMO||Imperial Oil Limited||F||D||F|
|KMI||Kinder Morgan, Inc. Class P||F||D||D|
|KMP||Kinder Morgan Energy Partners, L.P.||F||C||D|
|MRO||Marathon Oil Corporation||F||C||D|
|NBL||Noble Energy, Inc.||D||C||D|
|NOV||National Oilwell Varco, Inc.||F||C||D|
|OKS||ONEOK Partners, L.P.||F||C||D|
|PAA||Plains All American Pipeline, L.P.||D||C||D|
|PBR||Petroleo Brasileiro SA||F||D||F|
|PTR||PetroChina Co. Ltd.||F||C||F|
|TLM||Talisman Energy Inc.||D||C||D|
|WMB||The Williams Companies, Inc.||F||C||D|
|WPZ||Williams Partners L.P.||F||C||D|
|XOM||Exxon Mobil Corporation||F||C||D|