Big moves in energy stocks
Energy stocks have moved greatly since there has been a very big slide in oil prices since the summer. Since June of this year, the price of oil has dropped about 38%, going from $100 per barrel to $66 per barrel. When you have technological ways of doing business breaking down, it disrupts that model. This has happened to the oil industry.
Investing in energy stocks
This means there will be a lot lower input costs for many industries throughout the economy. But you can’t just buy a lot of stock in one particular sector, especially energy stocks. The recent gas drop has helped some oil companies while it has hurt others.
Important characteristics of a energy stock company
The oil companies that will survive this price drop have multiple lines of business, strong balance sheets with low debt and good cash on hand, and a senior management team that can act in a protracted level in a lower cost environment. The oil companies that don’t have these characteristics will lose market value.
Investors should gravitate towards energy stocks of the larger companies that have these components. Investing in energy stocks requires looking at the granular data of companies to assess these and other critical factors.
Do you have questions about your investments in energy stocks or other financial concerns. Feel free to call me at (205) 989-3498 or email me here.
Ashley Page, JD, MBA
Senior Vice President
fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Stock investing involves risk including potential loss of principal.