How do I Choose the Best Energy Stocks?

A. Leverkuhn

Investors who want to buy the best energy stocks can look at future projected values, do technical analysis, understand where markets are growing, and rely on updates from analysts or other professionals to identify the best stock picks for their portfolios. Strategies for choosing superior energy stocks combine an analysis of a single energy option, with technical analysis of a company’s financial health. Those who have a strong game plan for pursuing energy equities often end up realizing more capital gains than those with a relatively unsophisticated approach.

Some alternative energy stocks allow individuals to invest in wind power.
Some alternative energy stocks allow individuals to invest in wind power.

A big part of choosing the best energy stocks is evaluating overall market movements. Investors want energy stocks that will gain over time, and that means considering how a company will function within a greater market. Examining earnings, market capitalization, moving averages, and other data will help investors to get the best energy stocks.

Another component of buying the best energy stocks is to understand where a particular energy investment plan is taking the investor. One big choice is whether to focus on traditional energies like coal and oil, or pursue new sustainable or renewable energies in the “green” sector. These two plans are altogether different, and making decisive plays on energy often means evaluating what energies will be in demand in the future.

Investors also have a whole lot of options to choose from in getting involved with energy trading. Besides single stocks, a trader can buy or sell energy futures contracts, where energies are treated as commodities, or invest in a multitude of different funds. Mutual funds focused on energy allow investors to participate in gains from a “basket” of energy stocks or commodity plays. So do exchange traded funds (ETFs), which are very popular because of their transparent access, and the way they allow some traders to keep investments more liquid.

When a trader is deciphering all of the options that he or she has for investing in energy, another consideration might be a regional analysis. Some national markets supply more energy than others, and some are expected to grow at a faster pace over future years. This leads many investors to take a “regional approach” to picking energy stocks, where they combine pursuit of energy related gains to strategies that are tied to the economic engines of specific nations. From regional picks to energy sector choices, deliberate, thoughtful plays will help the trader get the most out of energy stocks.

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