These Stocks Beat Petroleum Stocks

With the price of oil flirting with $100 per barrel, and energy consumption continuing its steady rise, investors may think that petroleum stocks are at the top of the heap. But I've found investments from another sector that are beating the pants off petroleum stocks ... and I know where you can find out more about them.

Would the real hot stocks please come forward?
The 5,300 stocks rated by our Motley Fool CAPS community include descriptive "tags" that group them with other firms sharing similar qualities -- a country of origin, a sector, or an end product, for example. Clicking the Petroleum tag pulls up a list of 22 stocks that have collectively risen an amazing 32% in the past year.

But CAPS tags can also lead you to a group of stocks that have outpaced even the robust returns of stocks in the petroleum group: Infrastructure. The 17 companies under this tag have averaged an even more impressive 78% return in the past year.

Each group has its share of winners and losers, of course, but CAPS can be a great resource to zero in on potential opportunities in each area.

From macro to micro
You can sort tag groups by their CAPS ratings, from one to a maximum five stars, then see which players -- from Wall Street to Main Street -- are bullish or bearish on the company, and why.

For instance, here are a few of the stocks in the Petroleum group:

Company

CAPS Rating

1-Year Performance

ConocoPhillips (NYSE:COP)

*****

34.1%

Schlumberger Limited (NYSE:SLB)

*****

66.2%

Halliburton (NYSE:HAL)

****

26.8%

Nabors Industries (NYSE:NBR)

****

(3.6%)

Sources: Google Finance and Motley Fool CAPS, as of Jan. 11.

Now, here's a sampling of Infrastructure stocks that -- judging by interest in the CAPS community -- investors may want to consider.

Company

CAPS Rating

1-Year Performance

Foster Wheeler (NASDAQ:FWLT)

*****

195.1%

McDermott International (NYSE:MDR)

*****

132.8%

Fluor

****

84.9%

Shaw Group (NYSE:SGR)

****

86.9%

Sources: Google Finance and Motley Fool CAPS, as of Jan. 11.

Build it and they will come
Both the petroleum and infrastructure sectors are being driven by strong macroeconomic factors. But since they're much closer to consumers' hearts (and pocketbooks), energy companies tend to be more well-known to the average investor. Infrastructure firms -- engineering companies that build roads, bridges, buildings and other facilities -- aren't exactly household names, but they've been flourishing nonetheless.

Yet the same trends that have lifted petroleum stocks are supporting infrastructure companies as well. Those same corporations build refineries, power plants, and reactor facilities, and rising demand for energy means more orders coming in. For instance, in its most recent quarter, backlog at Shaw Group jumped 47% to $14 billion. Some $6.6 billion of that was tied to fossil and nuclear power projects.

Shaw Group in particular is putting a lot of its eggs in the nuclear basket. The firm bought a 20% stake in Westinghouse in October 2006, and it's booked contracts to build several nuclear facilities in China. Hopes for more profits on the back of renewed interest in nuclear power have put Shaw Group investors in the hugging mood lately. The CAPS community gives Shaw Group a favorable rating as well, with 298 of the 320 investors who rate the company believing it will beat the S&P in the future.

Other infrastructure firms, such as Foster Wheeler, are held in even higher esteem by the collective CAPS community. The $10 billion heavy-construction firm has been on fire all year, tripling during 2007 before falling back to open 2008. At 21 times 2008 earnings estimates, the stock is not particularly cheap at this point. But many investors point to Foster Wheeler's diversity of contracts around the globe, and the continued demand for energy infrastructure, as reasons to remain bullish on the stock. Indeed, 742 of the 761 investors rating the company in CAPS give it the thumbs-up.

Before you buy ...
Of course, investors shouldn't look in the rearview mirror to see where they should be investing now. But the underlying reasons behind dramatic run-ups in stocks or groups of stocks can clarify macroeconomic trends that may significantly affect investments. Just make sure to do your own due diligence, rather than following crowds or individual recommendations.


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