NEW YORK (TheStreet) -- TheStreet's Jill Malandrino and Stephanie Link, co-manager of the Action Alerts PLUS portfolio, discussed the newfound appeal of energy stocks. 

Malandrino noted that Options Profits recently added to its bullish position in Encana (ECA), while Link said she and Jim Cramer recently added to the AAP portfolio's position in Chevron (CVX). 

Chevron recently reported a horrible fourth quarter, and shares are 9% off the highs, Link said. She added that production fell 3.5%, which is also not very good. However, the company continues to pump money into all sorts of different assets, which should eventually produce higher profits in the latter half of this year.

Link is looking for Chevron to reduce its capital expenditures while increasing its operating leverage. The stock should get a boost if this happens, and she said she wants to be in position before the move occurs. 

Luckily, Link and Cramer can wait for the move to occur, with Chevron paying a 3.5% dividend yield and likely raising the quarterly payout in April, she said. 

In order to make room for the heavier exposure to energy stocks such as Noble Energy (NBL), Occidental Petroleum (OXY), and National Oilwell Varco (NOV) , Link said AAP is reducing exposure to the financial sector to market-weight from overweight and selling shares of Morgan Stanley (MS).  

"I just don't like the way the yield curve is acting in the near term, even if it is temporary," Link said. AAP will buy back Morgan Stanley on a deeper pullback.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

More from Opinion

AAP Exclusive: Cramer Says The President is No Longer on the Side of the Bulls

AAP Exclusive: Cramer Says The President is No Longer on the Side of the Bulls

Why It Makes Perfect Sense for Netflix and Amazon to Buy Up Movie Theaters

Why It Makes Perfect Sense for Netflix and Amazon to Buy Up Movie Theaters

2 More Reasons to Sell All Your Stocks and Run Away

2 More Reasons to Sell All Your Stocks and Run Away

Sean Hannity's Link to Trump Lawyer Raises Questions: Doug Kass Insider

Sean Hannity's Link to Trump Lawyer Raises Questions: Doug Kass Insider

Netflix Blowout Earnings Remind Investors of One Thing: This Company Is a Beast

Netflix Blowout Earnings Remind Investors of One Thing: This Company Is a Beast