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The United States is not yet energy independent, but it will be soon. If current trends hold, the U.S.' energy production will match its demand for energy by around 2025.
You see, energy independence is achieved when a country produces all the energy it consumes and doesn't need to rely on foreign sources of energy.
Achieving energy independence is an alluring goal for American politicians. Freeing the country from dependence on foreign sources of energy strengthens national security since the country wouldn't be reliant on oil from the tumultuous Middle East or unstable countries like Venezuela.
Today, we have three stocks ready for double-digit gains this year as the United States continues to strive for energy independence. Before we get to those picks, here's exactly how the U.S. will achieve energy independence...
How the U.S. Will Become Energy Independent
For the United States to become energy independent, the energy sector will need to grow by at least 16%. Over the last decade, the United States consumed an average of 97 quadrillion British thermal units (Btus) of energy a year, while it produced 83.877 quadrillion Btus last year.
Adding 13.2 quadrillion Btus of energy is entirely possible, but that growth has to come from just three sectors: crude oil, natural gas, and renewable energy.
That's because some other sources of American energy production are stagnant or declining. Energy produced from coal has fallen 28% since 2014, and energy produced from hydropower has fallen 12% since 2000. Nuclear energy production has also remained flat over the last decade.
That leaves oil, natural gas, and renewable sources as America's energy growth sectors. Those sectors are also presenting great investment opportunities right now.
What's even better for investors are the new innovations and discoveries in each sector that are driving their growth rates.
Consider the oil and gas sectors. Horizontal drilling and hydraulic fracturing - or fracking - have dramatically expanded America's oil and gas reserves. Starting around 2008, the use of fracking became widespread, making oil and gas trapped in shale rock recoverable.
For natural gas, this meant the gargantuan Marcellus formation - the largest natural gas play in North America - was now accessible. Natural gas production is up 40% since fracking woke up the Marcellus play in 2008.
At the same time, shale oil is now recoverable. That's led to booms in shale fields from North Dakota to Texas. U.S. oil production surged from 5,000 barrels a day in 2008 to 9,000 barrels a day in 2016, an 80% increase.
And just last year, 20 billion barrels of recoverable oil were discovered in the Permian Basin in West Texas. That could make it one of the world's largest sources of oil and a key for American energy independence thanks to horizontal drilling.
While fracking has reinvigorated oil and gas production, renewable energy is also on the cusp of electric growth. The EIA projects renewable energy production will grow 103% by 2025.
Better technology is lowering costs in the renewable industry, especially for wind and solar. The costs of producing electricity from solar energy are 1/150th of their costs in the 1970s. Falling costs are a big reason why solar energy has now achieved grid parity in 20 states. That means it's just as cheap to use solar power as it is traditional sources.
Grid parity is turning solar power into a major growth sector...
In 2016, 40% of all new electric-generating capacity came from solar energy, which was the most of all energy sources. By 2018 alone, the EIA forecasts the solar industry will grow by 60%.
Achieving American energy independence means the oil, gas, and renewable energy sectors, especially solar energy, will be growing rapidly through 2025. Right now is the perfect time for investors to jump into oil, gas, and solar.
To help you make the right investing decision, we're showing you three of our favorite energy stocks, one from each of these booming sectors...
3 Stocks to Profit from American Energy Independence
Magellan Midstream Partners LP (NYSE: MMP) is a midstream oil company that transports and stores oil. Midstream companies like MMP are excellent oil stock plays because they have transparent business models and lower costs than their production and refiner counterparts.
One of the main reasons we like MMP so much is that it's connecting its pipelines to the Permian Basin. That's where the 20 billion barrels of oil I mentioned earlier were discovered, and it has major oil producers from Exxon to Chevron flocking to the region.
MMP has 10,000 miles of pipelines running all across North America, and it's adding 1.7 million barrels of capacity to its pipelines between the Permian Basin and its Gulf Coast storage facilities.
As oil production rises in the Permian Basin, MMP will be doing a lot more business by taking the oil to major hubs.
Magellan is also a well-run company. MMP boasts an impressive profit margin of 36.4%, meaning 36.4% of the company's revenue is pure profit.
That sort of cash allows MMP to pay a generous dividend yield of 4.77%.
MMP shares trade at $73.10. But Wall Street analysts have set a price target for MMP of up to $90 this year, which could net you over 20% profit, plus those quarterly dividend payments.
CONSOL Energy Inc. (NYSE: CNX) is one of our favorite natural gas stocks to own in 2017.
CONSOL used to be one of America's leading coal companies. But as coal declined, CONSOL moved into natural gas. It's been selling off coal assets to buy up more real estate in the Marcellus and Utica shale formations.
Natural gas production is now more than half of CONSOL's earnings as of 2016.
CONSOL's evolution into a natural gas company producer is already paying off. The company's stock is up 10% since this time last year. On its May 2 earnings call, the company announced it beat estimates by 70%, its first time beating estimates in a year.
The great news for investors is the stock is still trading at some of its lowest levels since 2004. Wall Street analysts forecast CNX's share price could shoot up 60% this year, so it's a great opportunity for investors ready to profit from CNX's transition to natural gas.
CNX currently trades at $16.20 a share.
Woodward Inc. (Nasdaq: WWD) is one of our favorites from the renewables sector.
Woodward is an industrial company that makes the supplies and software for the renewable energy sector work. Woodward makes everything from solenoids, converters, aeroderivative turbines, electrical grids, and the software to connect it all together.
We like Woodward because the products it makes are essential to the entire renewable sector. That gives its owners broad exposure to the booming renewable energy industry. On top of that, Woodward is simply a well-run company with a proven track record. This gives its owners confidence compared to a lot of new companies popping up in the renewable sector.
WWD currently trades at $67.47 a share, and Wall Street analysts predict it could rise more than 20% in 2017 alone. But that growth will be even more dramatic as the renewable sector continues to soar through 2025.
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