NEW YORK (TheStreet) -- Unrest in the Middle East is causing volatility in the price of oil, but fund managers say the main engine pushing energy shares higher remains the global economic recovery and a supply squeeze.
searched for three powerful energy stocks with Stephen Davis, senior associate portfolio manager for the Alpine Mutual Funds, and Mark Schultz, fund manager of the
MTB Mid-Cap Growth Fund
Apache is an oil and gas exploration and production company operating all the way from the U.S. to Australia. The company's international locations help diversify geologic and geographic risk as well as offer it exposure to larger reserve targets, which fuel production and reserve growth. Apache also has exploration interests in Chile located in the Tierra del Fuego.
While Apache shares came under pressure recently due to its Egyptian exposure, the company's more than 39 million acres across the globe bring ample growth opportunities, says Davis.
"Apache has a strong management team, terrific acquisitions of assets from their
and Mariner transactions and overly negative concern that the new Egypt leadership won't honor oil contracts," says Davis.
Occidental Petroleum is an international oil and gas exploration and production company with operations in the U.S., the Middle East, North Africa and Latin America. Oxy is the fourth-largest U.S. oil and gas company, based on its $81 billion market value. The company's wholly owned subsidiary, OxyChem, makes chlor-alkali products and vinyls.
Earlier this month, Oxy increased its annual dividend 21% to an annual rate of $1.84 per share, compared to the previous annual rate of $1.52 per share. Oxy has raised it every year since 2002, and Davis expects more increases ahead.
"Occidental has phenomenal management, and their recent operational problems, which are hurting production, should get worked through next year especially as they increase capital expenditures," says Davis.
Oil and gas wells eventually lose pressure, so drillers need an artificial lift, or pump, to bring the resource to the surface. Lufkin, which has been in business for more than 100 years, has a dominant share in the pump-jack market. The company also services the equipment and has a power-transmission business.
There is competition from
and China, says Schultz, but Luflkin is the industry standard.
"Lufkin is growing and looking to make inroads internationally, especially in Europe. And with more wells being drilled, the long-term secular growth drivers for Lufkin's business are in place," says Schultz.
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