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It's a great time to ask what energy stocks to buy now.
After facing a terrible 2012, the energy sector has been on the rebound largely due to a rise in oil production in the U.S. The current boom in oil production shows little signs of waning, which should strengthen energy stocks looking forward.
As winter begins to transition into spring, seasonal changes are also seen in the markets. While many investors express concern that the bulls are shrinking in favor of bears, those with experience understand that a bearish market merely represents opportunity. This is especially true with energy stocks.
Demand for crude oil will begin to accelerate with the advent of warmer weather, and energy stock values will rise as well.
When considering what energy stocks to buy now, traders are increasingly turning to exchange traded funds, or ETFs. These investment bundles behave in a similar fashion as mutual funds, but with impressive tax savings.
While ETF's carry the same or similar risks as other investment vehicles, they are also an attractive option for investors looking to maximize returns or hedge against risk of loss.
When considering what energy stocks to buy now, one option to consider are tax-saving ETFs.
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…
Here are two of the top energy ETFs for investors shopping for energy stocks to buy now.
What Energy Stocks to Buy Now: Two ETFs with Massive Potential
- SPDR Oil & Gas Exploration and Production ETF (NYSEARCA: XOP)
XOP, incorporated in the United States in June of 2006, was designed and configured to mirror the S&P Oil & Gas Exploration & Production Select Industry Index in performance to the greatest extent possible.
XOP has experienced volatility to a degree. It dropped around 6.5% from the start of 2014 through early February. However, XOP made up for lost ground the rest of that month, and is now up 12.26% year-to-date – and 40.61% since this time last year. having peaked last October before sliding 13% in February.
XOP was trading at $76.96 per share on April 17. Its 52-week range is $54.04-$77.01. The ETF has a market capitalization of $961.5 million, with a price-to-earnings (P/E) ratio of 9.20.
- United States Oil Fund LP ETF (NYSEARCA: USO)
Since its inception in April of 2006, USO has approximately $607 million in assets with a reported total return of 11.09% over the past year. Designed to track the activity of West Texas Intermediate light, sweet crude oil, the USO provides a means to hedge market and futures movements of crude oil.
In February, USO managed to creep above short-term resistance, suggesting a slight rally to touch the upper limits of a coiling pattern that has spanned three years from May of 2011. This is in sync with the normal seasonal pattern typically observed for energy stocks.
USO shares are up 6.51% in 2014 to $37.62 per share as of April 17, with a 52-week range of $30.79-$39.54. The ETF has a market capitalization of $586.87 million, and a P/E ratio of 10.22.
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