Today will be the final installment in the mini-series I started last week that I have called "The top sectors to own through a recession." The point of this series is to let investors know what kind of stocks work in the economic downturn that we are in now, and in similar recessions in the future. Without further ado, its time to unveil the top five energy stocks to own through a recession. 
Top 5 Energy Stocks to own through a recession
- ConocoPhillips (NYSE:COP) I'm a big fan of how ConocoPhillips is being run right now. It is a huge integrated oil company, but it is also allowing itself to profit from higher oil prices more than many of its competitors. The yield of 2.2% helps provide a little bit of a buffer on the shares as well.
- Transocean (NYSE:RIG) If this were just a list of my favorite energy stocks in general, this one would be number one. It gets eeked out by COP because of COP's size and power, but this company is a great way to play oil. RIG is the undisputed market leader in deepwater drilling and the deepwater drilling market is absolutely on fire. The merger with GlobalSantaFe is proving to be a great strategic move.
- Chesapeake Energy Corporation (NYSE:CHK) Chesapeake is a market leader in the natural gas area. Natural gas has lagged behind crude oil significantly until lately, when it has started to catch up slightly. It is likely that over the long run natural gas will also do quite well.
- Schlumberger Limited (NYSE:SLB) SLB provides the necessary oilfield technology services that so many different companies need. SLB is in a strong position because they have services that are difficult to duplicate, and they have a near monopoly in many of their areas.
- Ultra Petroleum (NYSE:UPL) This is by far the smallest company on this list, but it is also the best pure growth play on the price of oil and natural gas. If you believe oil and natural gas could continue to move higher through future recessions, this is a stock for you.
Some may question why energy stocks would be in a portfolio of stocks that are the best to own through a recession. My answer to that would be two-fold: 1. This is a new era in which energy and other commodities can actually help cause a recession rather than trade with one. 2. There aren't a lot of stocks that are great to hold through recessions, and after all this is the fifth ranked sector on my top five.
While it will likely not be the case all of the time in the future, up to this point through this recession oil has not reacted at all negatively to the recession. In fact as I said before, in large part it has helped aggrevate the recession. The demand for crude oil in developing countries is just tremendous, and even in a developed countries recession, crude will likely have plenty of demand from other growing players.
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Posted by: Lisa O | December 12, 2008 11:56 PM | Permalink to Comment