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Today I'm going to tell you about an energy company that, within the next month, I'll be buying into with $4,000 of my own money. I'm so confident that my pick will outperform the market that if I sell any shares within the next three years, I'll donate $100 to charity.

Before I get to the actual pick, I want to take you through my thought process that brought me to my decision.

Should I buy Big Oil?
Right now, the largest company in America is ExxonMobil (NYSE: XOM  ) . Its market cap tops $400 billion, and it posted 2010 profits of $30.5 billion -- up a whopping 58% from 2009. With a solid 2.1% dividend, a low payout ratio of just 25%, and 28 consecutive years of dividend increases, an investor really couldn't go wrong with Exxon.

But for some reason -- call it my fear that Peak Oil enthusiasts could someday be right -- this company just doesn't sit right with me. I'm not able or willing to keep track of all the different oil fields Exxon is exploring, or how they're all producing. And in investing, if you aren't going to have fun following a company, there are probably better options out there for you.

What about natural gas?
Over the past few years, natural gas has been all the rage in the energy field. With citizens and politicians alike wanting to wean themselves off of foreign oil, and vast, untapped supplies of natural gas available in North America, this fuel might be powering our homes and businesses 100 years from now.

One of my favorite plays in this field is Provident Energy (NYSE: PVX  ) . The Canadian company is a pure play on natural gas liquids, and it offers a better-than-average 3.5% dividend yield. But once again, with so many energy choices out there, I find myself hesitating. Call me a hippie if you want, but until I have a better understanding of the environmental ramifications of fracking -- the process by which natural gasses are extracted -- I'm staying away.

For that very same reason -- even though I own a small portion of it in my "Crazy Portfolio" -- I won't be devoting the big bucks toward Westport Innovations (Nasdaq: WPRT  ) . The company designs engines that can run off of natural gas, and it's been firing on all cylinders lately, but until I better understand fracking, I won't be putting the big bucks here.

Any other unusual plays?
Two other companies have piqued my interest. EnerNOC (Nasdaq: ENOC  ) provides intelligent energy solutions that ease the strain on our power grids. Basically, the company acts as a liaison between energy providers and customers, lowering consumer consumption when energy companies tell EnerNOC that the grid is being strained. However, the company is still young, has only one year of profitability under its belt, and is trading for a sky-high valuation of 96 times earnings. While EnerNOC may be worth looking at, it just doesn't fit the temperament of my retirement portfolio.

The other play I find intriguing is Solazyme (Nasdaq: SZYM  ) . The recently IPO'd-company makes oil from low-cost plant sugars that can be used for fuel, nutritional purposes, or in the health sciences field. Of those three, I'm most interested in the prospect that the company's technology could provide airlines and other customers with cheap, efficient fuel. Like EnerNOC, though, Solazyme is very young. It has yet to turn a profit, and though I might throw some money at it, it won't be the cornerstone of my retirement portfolio.

Think of the Gold Rush
So when I finally had to make a decision, I thought back to the Gold Rush. Thousands moved out to California to make their fortune, but precious few found it in gold. Some clever busineses, however, sold things that gold prospectors needed -- picks, axes, shovels, and blue jeans-- and made out like bandits.

My pick today, National Oilwell Varco (NYSE: NOV  ) , fills the same niche today that Levi Strauss did more than 100 years ago. The company provides all the parts that oil and natural gas companies need to do their business. Dubbed "No Other Vendor" because of its ubiquity, the company's parts have a 60% share in the rig equipment market, and 90% of all rigs out there are equipped with at least some of its products.

Foolish takeaway
This is the ninth article in a series that I'm writing about my retirement portfolio, which I'm dubbing "The Cheesehead Portfolio" in honor of my home state of Wisconsin. If you'd like to see my first eight selections for the portfolio, check them out below.

But if you want a second opinion on stocks in the energy field, The Motley Fool has recommended many other strong companies. If you'd like access to a report on "3 Stocks For $100 Oil," it's yours -- absolutely free.

Fool contributor Brian Stoffel owns shares of National Oilwell Varco. By Aug. 20, he will have filled out his position in National Oilwell with at least $4,000. The Motley Fool owns shares of EnerNOC and Solazyme. Motley Fool newsletter services have recommended buying shares of National Oilwell Varco, Westport Innovations, and EnerNOC. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (5) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 29, 2011, at 9:53 AM, kidcobra wrote:

    How did you compute the yield on PVX?

  • Report this Comment On July 29, 2011, at 10:37 AM, TMFCheesehead wrote: was used in this case.

    Brian Stoffel

  • Report this Comment On July 29, 2011, at 11:20 AM, kidcobra wrote:

    HI Brian. I am pretty sure they pay around 4.6 cents per month.

    4.6 cents a share each month would be around 55 cents a year. .55/8.75 = 6.28%. Does this sound right?

  • Report this Comment On July 29, 2011, at 11:55 AM, Forza911 wrote:

    If the EPA finds fracking to be harmful to the enviroment how much of an effect would it have on NOV and its sales in onshore North American E&P?

  • Report this Comment On July 29, 2011, at 3:10 PM, 123spot wrote:

    Brian, look at Gasfrac GSFVF on Toronto exchange. It uses a patented technology for fracking that uses gelled LPG instead of water. No water use/run-off (LPG is recaptured and recycled)/ hauling. I keep looking at this technology because you can call me a hippy on the environment, too. I see environmental advantages to NG as well as its potential use to prevent oil based wars. I hope we can find a safe way to extract it. Cheers. Thanks for the NOV rec. What is its debt burden?

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