3 Reasons Why Smart Investors Like Oil Stocks Right Now
Great investors make money in a variety of ways, but one thing they typically share is the ability to identify opportunities when they arise and take maximum advantage of them. The energy sector has gone through extreme volatility in recent years, as huge moves in the prices of crude oil and natural gas have caused wild swings in many stocks throughout the industry. Smart investors have paid close attention to oil stocks in the hopes of finding strong future performers among the industry's top names, and three things in particular are making oil stocks favorites among top investors right now.
Many oil stocks have posted huge losses in recent years as their profits have fallen due to weaker energy prices, and that has left them trading at attractively inexpensive levels. Exacerbating the decline, many energy companies had made substantial investments when crude oil traded above $100 per barrel, and the level of leverage that smaller exploration and production companies took on left them extremely vulnerable to the industry's downturn. The result has been massive asset sales throughout the energy sector, often at bargain prices compared to what they sold for just a few years earlier.
Long-time energy investors understand that the oil and gas industry is cyclical, and boom and bust periods are a regular feature of the investing environment in energy. By buying oil stocks at the bottom of the cycle when times look horrible, smart investors put themselves in a position to reap the rewards when the industry inevitably recovers and high-quality energy companies start to see better performance again.
Source: Fool.com
