5 Great Oil Stocks To Grow Your Portfolio

#3. Enbridge Inc (USA) (NYSE:ENB)

While the first two oil stocks were about oil production and refining, Enbridge Inc (USA) (NYSE:ENB) plays a different role. They are an oil pipeline company. By doing a pipeline play, you can weed out some of the volatility that presents itself with producing and refining oil. After all, regardless of the price of oil, it still needs pipeline to be moved from place to place.

Enbridge Inc (USA) (NYSE:ENB) gets top honors here for a couple of reasons. First, they recently did a handful of acquisitions to help grow the business. In addition, they are working on $20 billion worth of fee based projects. Because of this, they anticipate increasing their dividend by 15% in 2017 and another 10-12% growth in the dividend through 2019.

Since the start of the year, Enbridge Inc (USA) (NYSE:ENB) has been trading in a small window so now could be a good time to get in on this stock.

#4. Core Laboratories N.V. (NYSE:CLB)

As with Enbridge above, Core Laboratories N.V. (NYSE:CLB) is a different play on the energy sector. Core Labs is more of a technology company that offers services that help energy companies, mainly oil and gas, to get the most out of their reservoirs.

They help oil companies by taking samples and estimating the amount of oil in reservoirs and help in increasing the production and recovery of the oil in those reservoirs.

While earnings growth for Core Laboratories N.V. (NYSE:CLB) recently haven’t been great, you have to dig deeper to see why this stock is a good investment. The main reason is the quality of earnings the company produces. In other words, they have much higher margins than competitors. As the oil drilling industry rebounds, Core Laboratories N.V. (NYSE:CLB) is going to be able to add a lot more to its bottom line without having to increase revenues all that much. Ideally, revenue will jump, but even if it doesn’t, the company will turn a healthy profit.

As with Enbridge above, this stock is also trading in a narrow window and could be the right time to get in and start collecting the dividend.

#5. BP plc (ADR) (NYSE:BP)

Many are familiar with BP plc (ADR) (NYSE:BP) after the major oil spill in the gulf coast of the United States back in 2010. The company ended up paying out close to $54 billion because of that disaster. Since then, oil prices have fallen, creating another obstacle for BP to overcome.

Their response to both has been to shift its focus to clean, renewable energy sources. BP plc (ADR) (NYSE:BP) has been acquiring other firms in this industry to help its bottom line grow. Still many analysts are instructing investors to steer clear of BP plc (ADR) (NYSE:BP) as they are selling off some of their most profitable properties as part of the agreement to end litigation related to the oil spill.

Still, the company pays close to a 7% dividend and if the new clean energy businesses can help to support the bottom line, this is a stock to own since most everyone is ignoring it.

The stock has pulled back from its high at the beginning of 2017 and now is a good time to gain exposure.

Final Thoughts

The energy sector is a complicated one. You have drillers and refiners, all who are impacted separately in some cases but the same in other cases. And with the global climate always changing, the byproduct is a volatile energy sector.

While volatility can be bad at times, it also tends to lead to overselling, which means you can get a good deal on oil stocks if you pay attention and are quick to act. Seeing as how the companies highlighted above are industry leaders, the opportunity to buy during oversold times is rare, so it is important you set alerts for price targets and get in when it makes sense for you.

Just be certain that when you get in, you set stops and limits so that you can just as quickly get out should large pullbacks occur.

This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.

Note: This post was originally published on ModestMoney.com. Check out their site for the latest investing news and analysis.