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March 16, 2012, 12:02 a.m. EDT

How $100-plus oil can prime your portfolio

Energy-sector stocks and ETFs can offset pain at the pump

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By Steve Gelsi, MarketWatch


Reuters

NEW YORK (MarketWatch) — Don’t get mad at high gasoline prices; get a piece of the action.

Many stock-market strategists believe the energy sector will be among the best places to invest this year. With oil topping $100 a barrel, investors have a deep well of possibilities.

Energy stocks with the most bullish ratings from analysts are a logical starting point for investors looking to counteract the sting from pricier crude oil and $4-a-gallon retail gasoline prices in the U.S. Read more: Natural gas could be U.S. energy market’s biggest bargain.

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“Energy stocks may be a hedge against geopolitical risk from the Middle East,” said Keith Wirtz, chief investment officer at Fifth Third Asset Management /zigman2/quotes/207561596/composite FITB -1.86% .

Wirtz, whose firm is overweight on stocks tied to oil and natural gas production, said the possibility that Israel will take military action against Iran for its nuclear buildup could spike oil prices. Read more: White House denies oil reserves release.

Meanwhile, slow-but-steady economic growth in the U.S. and overseas, plus sustained demand from China and India, have also boosted energy prices.

Wirtz said his two top energy stocks are National Oilwell Varco /zigman2/quotes/208758290/composite NOV -2.81% and Schlumberger Ltd. /zigman2/quotes/201012972/composite SLB -1.22% as pure-play oil service and equipment specialists with market-leading positions that fit his firm’s emphasis on overall quality.

“They’re also decent in terms of being shareholder friendly...with buybacks and dividends,” Wirtz said.

Dollars and dirt

Of the 44 energy-sector stocks in the Standard & Poor’s 500 Index /zigman2/quotes/210599714/realtime SPX +1.02% , Halliburton Co. /zigman2/quotes/210488727/composite HAL -3.02%  and National Oilwell Varco  rank No. 1 and No. 2 as the most highly recommended by Wall Street analysts, according to data compiled by FactSet Research.

Top 10 energy stocks
in S&P 500

The most bullish analyst calls
rank company ticker
1. Halliburton Co. HAL
2. National Oilwell Varco Inc. NOV
3. Consol Energy Inc. CNX
4. Marathon Petroleum Corp. MPC
5. Apache Corp. APA
6. Schlumberger Ltd. SLB
7. Denbury Resources Inc. DNR
8. Cameron International Corp. CAM
9. EQT Corp. EQT
10. Devon Energy Corp. DVN
Source: Sell-side Wall Street analysts as surveyed by FactSet Research as of March 5, 2012
/conga/story/2012/03/energy-stocks.html 197350

Coal and natural gas producer Consol Energy /zigman2/quotes/208647486/composite CNX -3.92% , refiner Marathon Petroleum Corp. /zigman2/quotes/209634297/composite MPC -1.00%  and independent energy producer Apache Corp. /zigman2/quotes/200648444/composite APA -2.44%  rank third, fourth and fifth, respectively, among analysts’ favorites.

Schlumberger, the largest oil service company by market cap, ranks No. 6 on the list of S&P 500 energy stocks, which includes electric power producers, big oil companies, independent energy companies, refiners and oil service firms.

Noticeably absent from analysts’ top recommendations are the two largest energy-sector firms, Exxon Mobil Corp. /zigman2/quotes/204455864/composite XOM +0.66%  and Chevron Corp. /zigman2/quotes/205871374/composite CVX +0.42% . With a combined market capitalization topping $600 billion, the pair are major components of the 30-stock Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.49% . Exxon reflects 11% of the Dow by market size, according to data from Dow Jones Indexes. Chevron ranks fourth with almost a 6% share.

/zigman2/quotes/207561596/composite
US : U.S.: Nasdaq
$ 31.48
-0.59 -1.86%
Volume: 1.18M
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P/E Ratio
15.71
Dividend Yield
3.43%
Market Cap
$22.85 billion
Rev. per Employee
$472,545
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/zigman2/quotes/208758290/composite
US : U.S.: NYSE
$ 13.49
-0.39 -2.81%
Volume: 1.72M
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N/A
Dividend Yield
0.00%
Market Cap
$5.39 billion
Rev. per Employee
$238,958
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/zigman2/quotes/201012972/composite
US : U.S.: NYSE
$ 25.11
-0.31 -1.22%
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P/E Ratio
N/A
Dividend Yield
2.00%
Market Cap
$35.39 billion
Rev. per Employee
$328,150
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/zigman2/quotes/210599714/realtime
US : S&P US
3,837.49
+38.58 +1.02%
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US : U.S.: NYSE
$ 19.92
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$18.16 billion
Rev. per Employee
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/zigman2/quotes/208647486/composite
US : U.S.: NYSE
$ 12.37
-0.51 -3.92%
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N/A
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N/A
Market Cap
$2.89 billion
Rev. per Employee
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/zigman2/quotes/209634297/composite
US : U.S.: NYSE
$ 45.63
-0.46 -1.00%
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P/E Ratio
N/A
Dividend Yield
5.11%
Market Cap
$29.99 billion
Rev. per Employee
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/zigman2/quotes/200648444/composite
US : U.S.: Nasdaq
$ 17.39
-0.43 -2.44%
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N/A
Dividend Yield
0.58%
Market Cap
$6.73 billion
Rev. per Employee
$2.00M
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/zigman2/quotes/204455864/composite
US : U.S.: NYSE
$ 49.16
+0.32 +0.66%
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Dividend Yield
7.09%
Market Cap
$206.51 billion
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$ 94.91
+0.40 +0.42%
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N/A
Dividend Yield
5.44%
Market Cap
$181.94 billion
Rev. per Employee
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