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Stock Picks: Energy Still Shines, Private Equity Attractive

With oil prices falling due to warm weather in the US, energy stocks, a safe haven since the start of the credit squeeze in August, may lose some of their attraction, but economists say some companies in the sector are still likely to perform strongly.

Shares of Dublin-listed Tullow Oil are to be watched closely, as the independent oil exploration and production company could benefit from merger-and-acquisition activity in the sector, Alex Crooke, fund manager at Henderson Global Investors, told "Power Lunch Europe."

"I think these oil stocks …are still riding the sweet spot of M&A, and good results in drilling as well," he said.

Tullow, one of Europe's largest oil explorers with operations in Europe, Africa, South Asia and South America,could be the target of takeover bids by bigger companies eager for consolidation in the lucrative energy sector.

Shares of Tullow Oil were 2.4% higher mid-day. The session's best performers were UK gas producer and distributer BG Group, Edinburgh-based oil and gas exploration and producer company Cairn Energy, and international offshore drilling contractor SeaDrill.

For investors who hope to avoid some of the ups and downs of economic cycles, Andrew Bell, European strategist at Rensburg Sheppards, singles out the private equity sector as being ripe for investment, particularly the London-listed firm 3i, which rose 1% on the London FTSE-100.

"Private equity has a long-term record of consistently beating the quoted indices for reasons that are not purely cyclical," Bell told "Power Lunch Europe."

"I think they recently had a set back and they look ok, as long as we don't have that hard landing," he added.

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