Buckling Up to Ride the Oil Roller Coaster

The stock, which dipped 52 cents Monday to $32.31 a share, is roughly $1 shy of the 52-week high it set last month.

Bob Howard, publisher of the investment newsletter Positive Patterns, is also extremely bullish on Canadian energy stocks. In addition to Encana, Howard strongly recommends Imperial Oil IMO and TransCanada Pipeline TRP.

"Take your pick," said Howard, who has no vested interest in the companies he covers. "Canadian [energy] stocks have outperformed U.S. energy stocks handily in the last few years.

"To me, it's one of the few really cheap asset bargain areas around."

Howard believes that Canadian companies benefit from deeper reserves, fewer drilling restrictions and cheaper currency than their American peers. But he's pretty excited about some energy companies stateside, too.

Like most industry experts, Howard is directing investors to hunt for winners among the energy majors -- the same place where they've struck it rich before.

The Usual Suspects

Meanwhile, most investment advisers warn against longshot gambles in the sector.

Yes, big oilfield firefighters like Superior Energy SPN and RPC RES -- and even near-bankrupt Boots & Coots -- could heat up if Saddam Hussein starts blowing up his oil wells in a war with the U.S. But that's a big "if."

Experts instead recommend more traditional sectors. Saut favors drillers, which also would benefit from oil well blowups but don't need them in order to succeed. And Edwards is big on oil services companies, Baker Hughes BHI in particular.

Edwards says the big oil services firms, which also include Halliburton HAL and Schlumburger SLB, will stay busy no matter how an Iraqi conflict pans out. If the war goes well, as most expect, the companies are looking at lucrative contracts to rebuild Iraq's dilapidated infrastructure. And if the war goes badly, Edwards says, the companies will enjoy increased business from customers chasing after the high energy prices that result.