It’s no surprise that conventional energy stocks have been strong performers in the past year. From industry leaders to smaller players, rising energy prices have fueled market-beating performance. With oil nearing $100 per barrel, it may be unthinkable, but the commodity could further rally further.
Given the amount of insider trades and unusual options activity in the energy sector we’ve seen over the past year and a half, it’s clear that institutional investors and experts are betting on a further rally as well.
Adding to the potential for a big rise quickly is in the political realm, where a war between Russia and the Ukraine could fuel a further move higher – although such a move might be short-lived.
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For investors looking for a pure-play on oil, without getting into oil services, pipelines, or other parts of the industry, one potential standout winner remains ExxonMobil (XOM).
The company’s global operations are diverse enough to deal with any global disruption in any single market. And with shares trading at under 15 times earnings, even with shares near a 52-week high, they look capable of further rallies, making the stock ideal to buy on a dip.
Action to take: For investors, it’s also one of the highest yielding dividend payers in the energy space right now, with a 4.4 percent starting dividend yield.
For traders, a far out-of-the-money call a few months out could be an inexpensive way to trade an energy market that could potentially explode higher in the coming days. The July $90 calls, last going for about $2.15, look inexpensive for a major move higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.