Avoid Big Oil Stocks and Make Huge Profits from These "Small" Plays Instead

Big oil stocks are some of the most recognizable companies in energy, but they won't bring you the big-time profits you're looking for. Instead, we've got "small" oil stocks that are ready to soar by double digits in 2017 while the bloated oil giants like Exxon Mobil Corp. (NYSE: XOM) tread water.

Oil investors have been optimistic about higher oil prices since OPEC agreed to cut oil production on Nov. 30, 2016. Since then, WTI crude oil prices have jumped around 5.5%. And oil prices are up nearly 80% since hitting their 10-year low of $26.68 in January 2016.

While oil prices dipped below $50 a barrel in early March due to increased U.S. oil production, Money Morning Global Energy Strategist Dr. Kent Moors predicts oil prices are heading above $60 a barrel this year.

Don't Miss: Read Moors Bold 2017 Oil Price Prediction

big oil stocksThat means investing in oil is a tremendous profit play this year. And now is the perfect time to jump in before oil prices rebound.

We'll show you exactly how to do it by owning the top oil stocks and show you why avoiding Big Oil company stocks is a smart strategy...

Big Oil Stocks Are Duds in 2017

Big Oil refers to oil companies that handle everything from oil refining to retail sales. And these Big Oil company stocks are struggling in 2017.

Exxon Mobil is down 9.38%. BP Plc. (NYSE ADR: BP) is down 8.91 %. Chevron Corp. (NYSE: CVX) is down 7.65%. That's all during a time when the Dow is up 4.3%.

The reason these oil giants are struggling is simple. Moors says the oil supermajors are tied up in "megaprojects" that aren't profitable and keep them from moving capital to more profitable projects.

You see, when oil prices were over $100 a barrel, Big Oil companies had money to finance these "megaprojects." But with oil prices closer to $50 a barrel, these projects are draining money while smaller oil companies are able to act quickly and rake in profits.

For example, BP just told its investors in February 2017 that it wouldn't be profitable unless oil topped $60 a barrel.

And Chevron sunk $8 billion into its Jack/St. Malo offshore rig in the Gulf of Mexico back in 2012 when oil prices were near $100 a barrel. But when the rig was ready to produce oil in December 2014, oil prices were in a downward spiral. Crude would eventually fall to $26.68 by January 2016.

That's why Chevron was forced to unload nearly $5 billion in its Asian assets last year.

But these Big Oil companies are scrambling to free up money to invest in a place where oil profits are booming. And you can beat them there by investing in the companies already pumping oil in this area...

How to Invest in Oil for Double-Digit Profits

American shale oil is already booming this year, but the biggest profits are still on the way.

Over half of the oil reserves in the United States are in shale oil. Shale oil doesn't reside in underground wells where it's simple to pump to the surface. Instead, it's found inside rock formations and must be removed through a complicated chemical process. That process can be expensive and means shale oil usually isn't worth producing unless oil prices are expensive.

But that's not the case anymore.

The breakeven price for shale oil used to be over $60 a barrel in 2014. That put a massive strain on the industry when crude oil prices crashed between 2014 and 2016. Some shale companies were even forced out of business in 2016.

Now, shale producers are back with a vengeance. As oil prices fell, these oil companies improved their processes and were able to lower their costs. The breakeven price for the biggest shale regions in the United States is now below $40 a barrel.

And now that oil prices are on the rise again, U.S. shale production is booming.

Just Released: These "Second Salary" Plays Could Make You and Your Grandkids Rich

U.S. oil production has grown 4% so far this year. And last Friday, the Baker Hughes Inc. (NYSE: BHI) rig count showed the United States added 21 rigs since the previous week. The U.S. now has its most rigs since September 2015.

Higher oil prices will see that production continue to increase, but there's more reason for optimism.

The Trump administration is the most oil-friendly administration in office in recent history. That's led to President Trump moving to lift restrictions on domestic oil and gas production. One of his first executive orders was to end a rule that required American oil companies to disclose payments made to foreign governments.

But President Trump has also placed former Oklahoma Attorney General Scott Pruitt in charge of the EPA. Pruitt made waves with his string of lawsuits against the EPA on behalf of the oil industry when he was attorney general. And now he's pledged to use his position running the EPA to limit environmental regulations to help the oil industry.

That means American shale companies will see their costs fall even further.

And that's why Big Oil companies are racing to get into shale oil. Exxon Mobil just bought nearly $6 billion worth of holdings in the Permian Basin in Texas.

But you can beat Big Oil to the profits by investing in the shale oil companies already raking it in, including one stock that analysts expect to rise up to 25% this year. And we think that's a conservative estimate.

Here are the best oil stocks to buy to take advantage of the new American shale boom...

The Best Oil Stocks to Buy in 2017

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Our first oil stock to buy this year is Magellan Midstream Partners LP (NYSE: MMP), which is a U.S. oil company that stores and transports both crude oil and gas from shale regions across North America.

One of the benefits of investing in a midstream company like Magellan is that it don't have to worry about the risks associated the exploration and production of crude oil. That's a risk Big Oil companies and specialty oil companies have to deal with. Instead, by transporting oil, midstream companies can benefit from the prosperity of the shale oil sector without gambling on production projects.

Magellan has more than 10,000 miles of pipeline connecting major shale oil regions across the country. As oil prices rise, it's also in the process of expanding its pipelines. Currently it's adding 1.7 million barrels of capacity to expand access to the Gulf Coast.

And while Magellan is positioned to grow as oil prices rise, it's a well-managed company.

MMP's profit margin is 36.4%. That means it's turning 36.4% of its revenue into straight profit.

MMP is trading at $77.23. Wall Street analysts have set a target price for the stock of up to $90. MMP also has a 4.43% dividend yield, which adds extra income for its owners.

Our second pick for the best oil stocks to buy in 2017 is Plains All American Pipeline LP (NYSE: PAA), which is another midstream company that stores and transports shale-produced oil in North America.

PAA manages more than 4 million barrels of crude oil and natural gas daily and has just inked a deal to boost its capacity to take advantage of the shale oil boom. PAA is partnering with Phillips 66 Partners LP (NYSE: PSXP) to construct a $15 million pipeline that connects a hub in Oklahoma with shale oil fields in Canada. This new project will create an additional 100,000 barrel capacity for the company.

Shares of PAA are currently trading at $30.89.

But Wall Street analysts predict its share price could soar up to 26% in 2017. Analysts are also predicting its earnings per share to rise 52% over last year.

Saudi Arabia's $100 Billion Plan to End Big Oil: Billionaires have been dumping oil stocks at a frantic pace. Warren Buffett sold $3.7 billion worth of oil holdings, Bill Gates unloaded nearly $1 billion, and George Soros closed out multiple positions. A former intelligence operative believes it's connected with the new fuel Saudi Arabia is pouring $100 billion into. Click here to find out more...

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