Which Energy Stocks to Buy as Oil Prices Keep Going Lower?

NEW YORK (TheStreet) -- Wall Street continues to focus on oil prices, which fell Monday morning only to rise almost 4%. What does this mean for stocks?  It means the U.S. is a winner from lower oil prices, not a loser, said Josh Brown, CEO and co-founder of Ritholtz Wealth Management, on CNBC's "Fast Money Halftime" show. Lower- and medium-income households will benefit the most from lower oil prices. 

Falling oil prices spur consumer spending, which represents 70% of U.S. GDP, according to Stephanie Link, chief investment officer of TheStreet and co-manager of the Action Alerts PLUS portfolio. Pete Najarian, co-founder of optionmonster.com and trademonster.com. He is a buyer of Devon Energy (DVN) . 

Drilling for oil has become much more expensive over the past few years, which is definitely hurting energy companies with poor balance sheets, said Jon Najarian, co-founder of optionmonster.com and trademonster.com. He is a seller of Carbo Ceramics (CRR) and a buyer of Schlumberger (SLB) . 

"It's always tough to call a bottom" on oil prices, said Dan Dicker, president of MercBlock LLC and a contributor to TheStreet. However, it does feel like oil is "getting real, real close" to one, he added. His top picks are EOG Resources (EOG) , Anadarko Petroleum (APC) and Cimarex Energy (XEC) . 

Stephen Gengaro, an analyst at Sterne Agee, said when oil does eventually bottom, investors should buy the high-quality oil-service stocks like Schlumberger, he said. Oil could reasonably bounce back to $80 to $85 in the longer term, he concluded. 

Don't forget about Marathon Oil (MRO) , Link said. It's a great restructuring story with a strong balance sheet and low costs. Royal Dutch Shell (RDS.A) is another good restructuring play, she added. 

Adam Parker, chief market strategist at Morgan Stanley, said the S&P 500 could climb to 2,275 by the end of 2015. The 10% rally would be fueled higher by increased earnings per share, despite the potential for higher interest rates. His top sector picks include energy and consumer discretionary. 

Pete Najarian said investors should stick with large-cap stocks that continue to outperform and pay attractive dividends such as Microsoft (MSFT) . 

The latest ISM report and other economic data points support a mid-2015 rate hike, assuming the economic data continue to be good, Link said. 

Investors are reacting negatively to the lower-than-expected Black Friday results, according to Pete Najarian. That reaction is overdone because holiday shopping is now spread out over several weeks.

Philippe Von Borries, CEO of the fashion and style Web site Refinery29, said consumers are now focused on multi-week shopping periods. Some of the big winners this year, especially for their "omni-channels," include Macy's (M) , Gap (GPS) , and Burberry (BBRYF) . 

For their final trades, Jon Najarian is buying ConocoPhillips (COP) and Pete Najarian is buying United Airlines (UAL) . Brown said to buy FireEye (FEYE) and Link is buying Newell Rubbermaid (NWL) .

-- Written by Bret Kenwell

Follow @BretKenwell

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