Here's how to play oil-industry stocks for long-term growth of 20% or more

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Oil producers continue to underinvest in supply, and daily usage levels are expected to hold up for many years, even with the transition to electric vehicles.

Oil demand is likely to hold up longer than many people expect during the anticipated transition to electric vehicles. And changes in the industry point to oilfield services companies as good long-term growth investments as offshore production ramps up.

Below is a list of oil producers and related companies favored by two analysts who have followed the industry for decades. The plunge in oil prices during the early stage of the COVID-19 pandemic was quickly reversed. Enough said. Simon Wong, an analyst covering the energy sector at Gabelli in New York, expects continued price volatility for oil stocks this year, because of the price decline from last year. He expects less cash to be distributed through special dividends and buybacks.

During the collapse of oil prices from mid-2014 through early 2016, “most of the offshore drillers went bankrupt and most of the equipment was destroyed,” Peters said. “So capital spending is rising and the offshore drillers have pricing power.” Peters said within the two funds he co-manages, he had “rotated to offshore services” in December, when ClearBridge became a large shareholder of Noble Corp. PLC NE . According to FactSet, funds operated by ClearBridge hold a 1.12% stake in Noble’s common shares. This makes ClearBridge the 14th largest institutional shareholder.

 

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