More Videos
- Strong Banks, Weak Credit: Treasury Rethinks TARP
- How Many US Consumers Will Shop this Weekend?
- Tuesday's Heavy Dose of Data to Dictate 'Risk' Behavior
- World's Largest Share Issue Priced at Deep Discount
- Obama says Boosting US Jobs is Top Priority
- Playboy to Outsource Most Magazine Operations: Report
- Why the Dollar Will Likely Stay Weak for Some Time
- EU Drops Proceedings Against Qualcomm
- Appeals Court Denies Microsoft's Alcatel Petition
- Can Murdoch Help Bing Challenge Google and Shift the Content Equation?
- HP's Mark Hurd
- HP Comes in As Expected; Is It Time to Buy?
- 9 Stocks That Play Rising Water Costs: Strategists
- Weis' Deal Likely Won't Change Big Money Contracts
- Gold Prices Can Double in 3 Years: Portfolio Manager
- Nov. 23: Unusual Volume Leaders
- Help Wanted—Please Run $4 Billion University
- Apple Comes to AT&T's Rescue
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Why Amazon Rules Retail
- Wave of Debt Payments Facing US Government
- The Social Media Gaming Threat
- China Eastern to Complete Shanghai Air Buy by End '09
- Gold Will Collapse Like Oil Did in 2008: Charts
- Paul: Audit the Fed
- Prepare For Large Decline In Stocks, Next Year?
- JAL Slides to Record Low on Bankruptcy Jitters
- Nielsen Ratings Coming to Video Games
Text Size 
The seemingly endless surge in energy prices is lightening wallets at gas stations everywhere. But it's also a potential bonanza for investors who have a multitude of ways to play the astonishing bull market run.
 |
CNBC |
As analysts continue to debate whether there's an energy bubble, market pros aren't wasting their time. Instead, they're focusing on how to profit from the trend.
"There are so many excellent ways to play the energy market," says Jordan Kimmel, a hedge fund and mutual fund manager at Magnet Investment Group in Randolph, N.J. "Everyone keeps looking over their shoulder to figure out where the top of the market is going to be and not recognizing how deep this global explosion is. This is not a supply interruption increase, this is really demand-driven."
To be sure, there are plenty of risks in the strategy. Should the oil boom suddenly go bust that would spell trouble for a variety of investments. At the same time, if prices continue to rise that also would put pressure on major producers, as would the potential of windfall profits taxes that Congress continues to discuss.
As such, Kimmel is playing the energy market with diversification though a number of angles: Pipeline builders, natural gas suppliers and even alternative energy. Exploration companies have been popular among money managers, and President Bush's announcement Wednesday that he will encourage Congress to reverse a ban on offshore drilling likely will boost the industry.
Kimmel's plays include pipeline companies BP Prudhoe Bay Royalty Trust [BPT
Loading...
()
] and Persian Basin Royalty Trust [PBT
Loading...
()
]. Both pay solid dividends and, because they are focused on transporting fuel, are not subject to price fluctuations.
In natural gas, Kimmel recommends Contango Oil & Gas [MCF
Loading...
()
] and Warren Resources [WRES
Loading...
()
]. His top alternative energy play is Canadian Solar [CSIQ
Loading...
()
].
"Every guy's out there looking for the guy who's going to call the top," Kimmel says. "That's definitely not going to be me, and it's not going to be here."
Big Oil or No Big Oil?
Some investment advisors are staying away from the oil majors on the thinking that prices are too volatile and a big surge can have a negative impact on the major producers.
But Peter Miralles, president of Atlanta Wealth Consultants, is playing the entire sector and isn't afraid of stalwarts like BP [BP
Loading...
()
] and ConocoPhillips [COP
Loading...
()
].
"It's the same theme we've been on before--pretty much anything in energy. With prices where they are, they're going to continue to make a lot of money," Miralles says. "A 10 percent correction is nothing in the commodity area."
Elsewhere in the sector, Miralles likes companies that make the machinery and equipment used in petroleum, including National Oilwell [NOV
Loading...
()
], FMC Technologies [FTI
Loading...
()
] and Weatherford International [WFT
Loading...
()
].
He also is in coal, with recommendations for CONSOL Energy [CNX
Loading...
()
] and Massey Energy [MEE
Loading...
()
].
Natural gas also has the attention of John Massey, portfolio manager at AIG SunAmerica Asset Management, who believes a high trading ratio compared to gas, a warm summer trend and the possibility of a severe hurricane season as bullish factors.
In that industry he likes Ultra Petroleum [UPL
Loading...
()
], a company based in the Rocky Mountains that will benefit from the construction of a new pipeline that will greatly help with distribution.
Generally in energy, he recommends Schlumberger [SLB
Loading...
()
] for its big international base and ability to get into countries like Russia and Venezuela, which are more difficult places for US-owned companies.
And he says Cameron International [CAM
Loading...
()
] is a strong company for playing offshore and deep water drilling.
Print
Email
- A diet high in fat and sugar might actually be good for your portfolio.
- Warren Buffett and Bill Gates discuss the economy and other subjects with CNBC's Becky Quick.
- From the AIG&T to the Merrill Lychee, Jane Wells lists this year's fashionable holiday cocktails.
- The show attracts a big TV audience every year, but this year it may take on even more importance.
- …you'll want to be prepared. Tips for getting the most out of the post-Thanksgiving shopping frenzy.
- Congressman Ron Paul explains to Squawk Box why he’s pushing legislation to audit the Federal Reserve.
Data is a real-time snapshot *Data is delayed at least 15 minutes