This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

With Rising Oil Prices, Three Energy Funds to Consider

Stocks in this article: HAL PSPFX CVX FSENX IEYAX EOG APC MWE CLR

NEW YORK (TheStreet) -- Energy stocks have been rallying lately on rising oil prices.

So far his year, energy mutual funds have returned 3.9%, while the S&P 500 has lost 1.2%, according to Morningstar. A barrel of West Texas Intermediate crude sells for $103, up from $88 a year ago.

Can the energy stocks stay afloat? Some fund managers think so.

"Oil prices will stay high because there is resurgence in demand from Europe and other areas," says Brian Hicks, portfolio manager of U.S. Global Investors Global Resources Fund (PSPFX).

Despite their recent upturn, energy stocks remain cheap, portfolio managers say. While the price-earnings ratio of the S&P 500 climbed in recent years, energy multiples trailed. During the three years ended in 2013, energy funds returned 5.7% annually, compared with 16.2% for the S&P 500. Leading blue chips, such as Chevron (CVX) and Exxon Mobil (XOM) command price-to-earnings ratios of 13 or less, compared with 18 for the S&P 500.

Fund portfolio managers say that the energy stocks lagged in recent years because investors worried about softening oil prices. According to energy bears, markets seemed poised to face oversupplies as U.S. shale production rose.

At the same time, demand was likely to remain stagnant as global economies struggled. But the excess supplies never materialized because of production slowdowns in foreign fields, including the North Sea and Iran. As a result, oil prices stayed firm.

To bet that demand will remain healthy, consider an energy fund. Top choices include Fidelity Select Energy Portfolio (FSENX) and Ivy Energy Fund (IEYAX).

For a broader portfolio, consider U.S. Global Investors Global Resources, a natural-resources fund that holds mining and precious metals along with energy.

Fidelity portfolio manager John Dowd holds a mix that includes fast-growing smaller companies as well as some lumbering giants that may be undervalued. During the past five years, the fund returned 16% annually, outperforming 87% of its peers.

Dowd holds some companies that are growing rapidly by exploiting shale fields. He is particularly keen on developers that have reduced costs through trial and error.

"The companies that have figured out how to improve productivity are reporting better earnings growth than the industry overall," he says.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs