Top 5 Total Return Stocks to Invest

The energy sector is very large and consists of several industry groups such as oil and gas producers, oil and gas services companies and oil and gas equipment manufacturers, as well as oil refiners and pipelines. Companies that produce and distribute energy such as gas and electric utilities, as well as alternative energy companies, can also be classified as belonging to the energy sector. Multiple factors affect the performance of the different groups within the sector and the companies within each group, producing different top performers at different times.

1. Natural Resource Prices

   • The prices of oil and natural gas have the greatest impact on the price of oil and gas stocks. The higher the prices of those commodities go, the higher the prices of oil and gas stocks can rise. Weather conditions, political developments and expert projections can also influence investor expectations and outlook for oil and gas prices, and can impact the prices of energy stocks.

   Oil and Gas Stocks

   • While prices of all oil and gas stocks are affected by changes in the prices of the underlying commodities, at any one time a handful of stocks will always outperform due to more specific factors such as unexpectedly high earnings, a major oil discovery or a strong technical position.

   Services and Equipment

   • Higher oil and gas prices encourage exploration and production. The increased demand for oil and gas services and equipment pushes up the prices of stocks in that group. But, again, not all oil and gas services and equipment stocks are affected equally. Demand for specific services or types of equipment may push up the prices of specific stocks in the group.

   Alternative Energy

   • Higher oil and gas prices spur interest in alternative energy stocks such as solar or wind turbines. But for all the hype, with the exception of solar, alternative energy stocks have been short on delivery. Most are still unprofitable or in the research and development phase. The fortunes of those stocks are strongly influenced by investor sentiment, media hype and technical position, not actual product sales or earnings. Each time alternative energy becomes "hot," a new crop of leaders emerges.

   Utilities

   • Natural gas and electric utilities are a mature regulated industry with limited growth prospects. Stocks in that group rarely make the headlines or excite investors, who buy them primarily for dividend income and relative price stability. As a group, utilities rarely outperform, and do not produce big stock market winners.