NEW YORK (TheStreet) -- I was talking to Stephanie Link, co-portfolio manager at Action Alerts PLUS about the drop in oil prices and what that means for oil stocks.

I warned Stephanie the drop in oil prices is coming specifically in domestic West Texas Intermediary (WTI) prices and that is having its greatest effect on the most focused domestic producers, those that have had the greatest momentum gains this year. That means stocks including Cabot Oil and Gas ( COG), Pioneer Natural Resources ( PXD) and Continental Resources ( CLR).

But for other stocks, I suggested to Stephanie this downturn in oil prices might represent an opportunity. Other oil companies are being deeply hit in share price while being far more diversified in assets and have far underperformed the "most-loved" momentum oil stocks we've discussed this year.

One stock I suggested might be worth buying on this dip is Devon ( DVN), one which has just announced an instantly accretive merger of midstream assets with Crosstex Energy ( XTXI). Devon has greatly underperformed the rest of the exploration and production energy space despite its wide asset base, tremendous cash position and tiny price to earnings ratio compared to peers.

I talk more about Devon and other oil stocks with Stephanie in the video above.

At the time of publication the author had a position in DVN. Action Alerts PLUS had no holdings in the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 25 years of oil trading experience. He is a licensed commodities trade adviser.

 

Dan is currently President of MercBloc LLC, a wealth management firm and is the author of "Oil's Endless Bid," published in March of 2011 by John Wiley and Sons.

 

Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts on CNBC, Bloomberg US and UK and CNNfn.

 

Dan obtained a bachelor of arts degree from the State University of New York at Stony Brook in 1982.

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