Are you considering oil price investing? With the recent rise in oil prices, investors are expecting a boom in oil industry stocks. While the price of oil has risen over the past year, the talk of Iran sanctions is expected to keep the price of crude oil above $60 per barrel for some time. This benchmark price is bullish for US oil producers and will continue until oil demand and production are in balance. According to the analysts, global oil production was at its peak three years ago even though the supply of oil was lower and demand continues to be strong. Oil industry stocks are good long term investments, but what is the best way to buy these stocks?
Tips for Oil Price Investing
- Analyze the performance of the oil industry before you pick an individual oil stock. Journals, magazines and online newsletters will help you get up to speed with the recent developments within the industry.
- Keeping abreast of developments in the oil and gas industry will help you determine which companies are poised to grow under existing conditions. Study the basic supply and demand drivers of oil prices and you will be ahead of the pack in oil price investing.
- Evaluate the financial status of the company including their cash flow and earnings. Oil has tremendous volatility which affects not only the price of oil, but also the companies in the industry.
- Oil stocks are categorizes as integrated oil companies, independent companies, refineries and oil services. Stock experts typically suggest buying stock in the large integrated oil companies to reduce risk. There are fewer companies solely involved in production and exploration and increases in oil prices make oil service companies more valuable.
- An alternative to individual oil stocks are Exchange Trade Funds (ETFs). ETFs are an
efficient option to invest in oil stocks and are effectively a basket of stocks or track an oil index. The best advantage of investing in ETFs is that you are diversified and not required to invest in just one single company stock. Some popular Oil ETFs include the PowerShares DB Oil Fund (DBO) and the Brent Oil Fund (BNO).
Best Stocks For Oil Price Investing
Nearly all of the companies listed below are integrated oil companies that focuses on the
exploration, development and production of crude oil and natural gas. They are also involved in refinery operations, trading and distribution of oil. The vertical integration of these companies allow them to scale the size of their operations, reduce costs and increase profits. The dividend yields are included as they can be a significant portion of your total return and some investors view dividends as getting paid to wait before the stock increases in price.
TOTAL SA (TOT) $61.25, 4% dividend
CHEVRON CORP (CVX) $121.33, 3.60% dividend
BP PLC (BP) $44.25, 5.38% dividend
EQUINOR ASA (EQNR) $25.88, 2.48% dividend
ROYAL DUTCH SHELL PLC (RDS.B) $72.28, 5.20% dividend
OCCIDENTAL PETROLEUM CORP (OXY) $82.45, 3.71% dividend
EXXON MOBIL CORP (XOM) $81.40, 3.81% dividend
CHINA PETROLEUM & CHEM CORP (SNP) $90.48, 7.73% dividend
ECOPETROL SA (EC) $20.43, 2.94% dividend
IMPERIAL OIL LTD (IMO) $32.21, 1.53% dividend
When oil price investing, try to minimize your risks and maximize your returns. Every Company has its own risk factors to be evaluated. If you are considering investments in other industries, you may also want to consider cannabis stock. This is a newly emerging industry with explosive growth throughout Canada and the US. One investment that stands out is FSD Farma, a cannabis company that recently entered the Canadian stock market.
Considering an investment in cannabis on the Canadian stock market? FSDPHARMA (OTCPK:FSDDF) (HUGE:CN) (HUGE:CNX) is your best bet. We are Canada’s leading licensed cannabis producers and processors; owning one of the largest hydroponic farms in Canada.