5 Stocks to Energize Your Portfolio

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There's simply no denying how important energy is not only to our economy, but to our very existence. If we need it to live, your portfolio should have it, too. Now is a great time for investors to take a closer look at energy stocks, many of which sit at compelling prices after May's market drubbing. Below I've outlined five stocks to diversify an energy-less portfolio.

A solid bet: National Oilwell Varco (NYSE: NOV  )
Ninety percent of the world's rigs have National Oilwell Varco equipment on them, if that's not market dominance, I don't know what is.

NOV is the world's largest rig equipment company, and it has a lot to gain from the growing interest in offshore drilling. Since 2000, the global deepwater rig count alone has increased from 20 to 200 -- and more are on the way.

The company recently purchased Schlumberger's Wilson oilfield-equipment distribution business for $800 million. The move doubles NOV's distribution business and makes it a force to be reckoned with in another services segment.

The riskier move: Continental Resources (NYSE: CLR  )
By all accounts, Continental Resources has had a great year so far. The company's share price is up 7% since January, and it is faring far better than its peers in the independent oil and gas world.

That being said, independent producers tend to be much more volatile than the integrated majors. Not only do these firms typically track the price of oil, the market often reacts strongly to any hint of bad news or disturbance in production. Consider the performance of Continental and ExxonMobil from the middle of March through the market's miserable May:

CLR Chart

CLR data by YCharts

Continental tracks the West Texas Intermediate spot price of oil pretty closely, while Exxon more or less weathered the storm. Year to date, Continental is outperforming the Big Oil behemoth, but investors should acknowledge that volatility factor before buying in.

The toll road: Pembina Pipeline (NYSE: PBA  )
Pembina's shares are down slightly since they first began trading on the New York Stock Exchange on April 2. However, the long-term outlook is good for Canada's third-largest midstream company.

The first quarter of 2012 was a big one for Pembina. The company closed on its acquisition of Provident Energy and joined the NYSE. From an operations perspective, systemwide volumes were up 15% year over year. Earnings were down because of expenses related to the Provident acquisition; if those expenses are excluded, earnings grew $0.10 per share. Revenue climbed from $140.6 million Canadian last year to $176.4 million Canadian in 2012.

The tangential play: Du Pont (NYSE: DD  )
The American Chemistry Council has high hopes for American chemical exports because of the low price of U.S. natural gas, and dollar exchange rates in developing economies, both of which benefit DuPont.

Additionally, the company expanded its footprint in the industrial biotechnology and biofuels market with its acquisition of Danisco last year. This gives DuPont the ability to cash in on energy in two ways: using cheap natural gas feedstock for its chemicals, and building a strong presence in alternative energy fuels.

The chemical giant is up over 5% year to date, and its future outlook is strong.

The hedged bet: BP (NYSE: BP  )
BP is one of the largest oil companies in the world, and although it recently ended its solar power development initiative, it maintains its work with wind power and biofuels. That commitment to alternative energies provides a hedge against its traditional fossil fuel business.

In 2007, BP announced it would invest $500 million over the course of 10 years in the Energy Biosciences Institute. The Institute is run by the University of California Berkeley and the University of Illinois and is dedicated to researching advanced biofuels, as well as converting hydrocarbons into cleaner fuels.

Foolish takeaway
The energy industry offers a ton of options for investors looking to diversify their portfolios. If your portfolio is already chock-full of energy stocks (brilliant!), consider checking out nine more ideas with the Fool's special free report, "Secure Your Future With 9 Rock-Solid Dividend Stocks."

Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy.

The Motley Fool owns shares of National Oilwell Varco. Motley Fool newsletter services have recommended buying shares of National Oilwell Varco. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (2) | Recommend This Article (7)

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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 May 30, 2012, at 6:29 PM, funfundvierzig wrote:


    This much shrunken chemical conglomerate based in Delaware is wrestling with a massive liability for underfunded pension and other benefit plans, and a mounting liability for claims flooding the courts and the Company's own internal processing unit for losses involving the toxic killing of hundreds of thousands of mature landscaping trees nationwide by DuPont's falsely, if not fraudulently marketed turf herbicide, Imprelis. The total price tag for losses may be in the range of $1 to $2 billion in our opinion.

    Moreover the Company is freighted with a stressed, over-leveraged balance sheet, now showing a worrisome negative tangible stockholders equity of MINUS $1 billion-plus.

    DuPont's sub-performing car paints unit, which accounts for nearly one out of every eight dollars of yearly revenue ($4.3 billion) is on the auction block, portending further significant shrinkage.

    Merely the independent opinion of one individual retail investor with a small long position in DD shares...funfun..

  • Report this Comment On May 30, 2012, at 6:39 PM, funfundvierzig wrote:

    Readers should note that top executives of DuPont have been "energising" their own portfolios by dumping DD shares big-time. There have been heavy insider sales over the past six months as one senior executive after another in Fortress Wilmington dumped DD shares. According to Yahoo! data, nearly one-quarter million shares of DuPont was tossed out of the portfolios of those who know the Company better than any one else.

    Most of the sales were above 50. Now DD is changing hands @ 48 and change. Cheers to Ms. Kullman, DuPont Chieftess and her crew of DuPont Presidents and Vice Presidents, and their Company-paid financial advisors for the shrewd timing on the disposal of shares of this struggling, Imprelis-weakened chemical conglomerate with massive liabilities for unfunded pension and other benefit plans.

    Savvy investors should always be aware of what those with the most complete knowledge of DuPont affairs are doing with their own money.


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