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When searching for energy stocks to invest in, buyers should consider some of the different funds that are at their disposal.
Energy stocks look promising in 2014. The sector has performed well overall. The S&P Oil & Gas Exploration and Production Select Index, which represents the oil and gas exploration and production sub-industry portion of the S&P Total Markets Index, has risen roughly 150% since 2009.
Moreover, there is a potential boom on the horizon. There will be a projected 56% increase in the global consumption of oil and gas by 2040.
Investors should carefully consider which energy producers will be best suited to deal with challenges within the market. Plus, given the excitement and security of the North American oil and gas boom, some energy stocks are overvalued right now, trading a bit higher than they should.
Ultimately, investors should take the long view in this sector. It's also advisable to diversify a portfolio containing energy sector stocks by selecting funds that operate in different market segments throughout the world.
Here are some top considerations for energy stocks to invest in now…
Three Considerations for Energy Stocks to Invest In Now
Beijing, China-headquartered CNOOC Ltd. (NYSE ADR: CEO) is starting to draw in a lot of attention from investors, owing to the high grade performance of its stock on the open market. CNOOC has been hit hard over the last few weeks due to exposure in Russia and factors related to the Crimea crisis.
But the company is a major player in the Canadian oil and gas trade. In 2012, the company paid $15.1 billion to purchase Nexen, a Canadian oil and gas producer. At the time, it was China's largest overseas energy acquisition.
CNOOC is constantly expanding its operations throughout the international market, including four new facilities opening in China. This could be an important factor for investors who want a secure, geographically diversified stock that will offer a reasonably high rate of return over time.
Note: The Fed's 2014 taper means volatility ahead. So we've outlined how to find profits in a volatile market – like triple-digit gains in just days – if you start with this strategy…
LUKOIL (ADR) (LUKOY) could be one of the top energy stocks to invest in. This up-and-coming Russian oil company has recently made moves on the international market, giving many investors the confidence they need to put their funds in LUKOIL.
LUKOIL operates multiple energy reserves, which has given it a fair amount of stability over the past few years. The company has also been active in opening a number of different refineries over the years. It has been enhancing its refining capabilities, thanks to a number of new innovations. This factor has helped to put LUKOIL at the forefront when it comes to new energy tech features.
Direxion Shares Exchange Traded Fund Trust (NYSEARCA: RUSS) is an ETF that has been drawing in attention from investors as well.
After getting its start in Russia, this ETF has quickly developed a name for itself in the energy market at large. This is thanks to the fact that it has diversified its listings to a considerable degree.
International investors have been wary of this fund recently, owing in large part to the crisis in Ukraine.
"This is a contrarian fund that is designed to return a 300% movement based on any Russian stock market weakness," Money Morning Global Energy Strategist Dr. Kent Moors said in March. "Now that can really work against you if the Russian market is moving up, but currently this ETF has been a good move."
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