Our energy bills are rising because the cost of gas and other fuels has increased. Predictions by analysts suggest that gas prices, especially in European countries, could rise by as much as 50%. One of the sectors that will gain the most while we all groan from inflation is the energy sector. As the cost of energy increases, while the cost of producing energy stays the same, companies in the energy sector would reap great windfalls in revenue. So if you love reaping gains from the stock market, my advice to you right now is to go for energy stocks.
Energy stocks dictate the tune of the game globally. Literally and figuratively, they power the world. I am a great believer in energy stocks the same way I fell in love with technology stocks years ago. Granted, these companies took a hit during the height of the pandemic in 2020, when lockdowns and travel restrictions were the norms. But all that is now in the past. Countries are reopening their borders, and many energy companies have shifted to carbon-free energy sources or actively researching this area. For the short-term, energy stocks will be gold. So If you ask me for advice, I’d say they are worth considering in every portfolio right now.
According to reports I received recently, the oil and gas sector had revenue of $2.1 trillion in 2021. But that segment is just a chunk of the energy sector. Energy involves many companies like oil and natural gas stocks, pipeline and refining stocks, mining stocks, and renewable energy stocks. The renewable energy sector is still evolving as it hosts a lot of energy companies like solar, wind, and geothermal energy. The energy sector is indeed a massive market as stakeholders in this sector do not produce only one form of energy.
When energy prices go up, the benefactors are energy companies. The shareholders cheer loudly and smile at the bank. That is what most of them are doing right now. For example, the revenue of ConocoPhillips (NYSE: COP), one of the major players in the oil and gas sector, was $38 billion for 2021. This represented an 80% increase over the prior year. You will be mouth agape if I spell out the figures for other companies in this sector.
Anyone who has a smattering of economics knows that the free market is driven by demand and supply. These factors are in favor of energy companies at the moment. As travel reopens globally, the energy demand has significantly increased. It is estimated that the world population would have increased by 1 billion between 2010 and 2030. What would all these numbers represent? Increased demand for energy. And who supplies it? The energy sector. Can you see why I am excited about the energy sector and the players in this area? If you haven’t done so, now is the right time to diversify in the energy sector. Buy shares in several of the primary energy companies like ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX), BP Plc (NYSE: BP), and TotalEnergies SE (NYSE: TTE).
Warren Buffett’s investment strategy is to only buy stocks in companies with solid fundamentals and potential for continued growth. A strong earning power is also part of his consideration. The energy sector has all these. So, invest like a sage and fill your stock portmanteau with energy stocks today. Your descendants will thank you later.
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