Energy Stocks
What are energy stocks?


Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.

Resource and commodity stocks in general should make up only a limited portion of your portfolio—say less than 20% for a conservative investor or as much as 30% for an aggressive investor. And as part of that segment, energy stocks could make up, say half of that total. The rest could be fertilizer stocks, mining stocks and so on.

Oil and gas stocks have been below-average performers lately, and many investors are tempted to get out of the industry altogether. However, the energy sector can play a crucial role in your portfolio as a hedge against inflation. The low inflation rates of the past couple of decades deserve some of the blame for the poor performance of the sector. However, energy stocks will likely rebound in years to come as the global economy recovers.

  1. Invest mainly in well-established companies;
  2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
  3. Downplay or avoid stocks in the broker/media limelight.

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Energy Stocks
Commodity investments: Stalking a natural-gas price bottom
The price of natural gas has fallen to around $2.50 U.S. per thousand cubic feet, a seven-year low. The price decline has been driven by lower industry demand during the recession. As well, consumers have cut their air-conditioner use because of cooler-than-normal summer weather in central Canada and the northeastern U.S. Another major factor is a buildup in gas inventories, to the point that the North American industry is running out of storage. According to the U.S. Energy Information Administration (EIA), natural-gas inventories are at 3.204 trillion cubic feet. That’s 21.3% higher than a year ago....
2 min read
Pat McKeough
Energy Stocks
Resource stocks have potential as a hedge against inflation
Government efforts now underway are likely to solve today’s financial crisis. But the cure will likely only come at a cost of much higher inflation, starting possibly in the next decade. We’ve been asked by a number of investors how this should influence their investing. Many have asked specifically about resource stocks. As a general rule, resource stocks will provide a hedge against inflation, because they gain directly from rising prices for the commodities they produce....
2 min read
Pat McKeough
Energy Stocks
Commodity Investments: Trade Commodities or Buy Commodity Stocks?
Commodity prices are down lately along with fears of lower demand due to a slowing global economy. That makes them a tempting investment for some investors bracing for a rebound. We like the long-term prospects for commodity investments, including metals and minerals, fertilizers and agricultural products. However, most if not all non-professionals who get involved in commodities trading wind up losing money. There are various structured products sold by brokers that give you exposure to commodity investments, while limiting risk. Most participants will ultimately lose money in these investments as well, or make a poor return in relation to their risk....
2 min read
Pat McKeough
Growth Stocks
EnCana Corp $48 - New York symbol ECA
ENCANA CORP. $48 (New York symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 772.0 million; Market cap: $37.1 billion; WSSF Rating: Average) is a leading Canadian energy company. Natural gas accounts for 80% of its production, while oil supplies the remaining 20%. In the three months ended December 31, 2006, lower gas prices cut EnCana’s profit 42.5%, to $0.84 a share from $1.46 a year earlier. These figures exclude unusual items such as gains on the sale of assets and hedging gains. Cash flow per share fell 24.3%, to $2.18 from $2.88, while revenue fell 37.3%, to $3.7 billion from $5.9 billion. In the past few years, EnCana has sold its overseas assets to focus on unconventional properties in North America, such as early-stage gas fields and the oil sands in Alberta....
1 min read
Pat McKeough
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