Five Funds That Tap Energy's Potential

It's high time to give your portfolio an energy boost.

A large contingent of the smart-money set is concluding that the energy sector, after years of neglect, deserves an overweighting in 2004 -- for several reasons. First, energy demand continues to rise while supply remains tight. Second, energy companies' earnings growth has been among the most impressive of all sectors and looks poised to continue in 2004. Third, the energy sector has tightened and (pardon the expression) refined its operations in the painful past two decades after the energy bubble burst, taking the sector from a 40% weighting in the S&P 500 to about 8% today. Last, energy stocks on average are dirt cheap compared with other sectors -- in part because the stocks don't reflect the higher oil prices that the market continues to discount.

"One of the big surprises for 2004 is that oil and natural gas prices are going to average much higher than anyone expects," said Leigh Goehring, co-manager of the Jennison Natural Resources fund. ...