Investing in Energy

Over the next 10 years, there are 2 sectors that stand out to me among the rest: Technology and Energy.  Today I will be focused on energy and why you should be in it. 

First, the world needs energy, and as countries like China and India become more industrialized, the world is going to need a lot of energy and fast.  There is no better way to play this than to buy oil companies.  Oil already sells for $100 a barrel, and will soon sell for much higher. 

To get the actual oil producers, you cannot go wrong with ExxonMobil (XOM), ConocoPhillips (COP), or Chevron Corporation (CVX).  Theses stocks are all attractively priced, with P/E's under 9 and Forward looking P/E's under 7.  There dividends range from 3 to 4%, and they have stable and growing demand for their product.  These stocks are great long term buy and hold stocks, but it is important to keep an eye on the news to make sure your oil stock does not suffer a BP-like disaster.  If it does SELL.

Another sneaky play right now is in oil rigs.  Because of what happened to the Macando well in the Gulf, investors have been avoiding these stocks with the plague, but with little reason.  These companies are undervalued and can pay dividends in upwards of 6 to 8%.  I am talking about Transocean (RIG) and Seadrill (SDRL).  Both companies are indeed risky, but their upward potential is off the charts. 

Disclosure: I own XOM