How long will Big Oil remain a solid investment?
In an interview with Barron's, Susan Byrne, the chairwoman and Chief Investment Officer of Westwood Holdings Group (WHG), explains a shift in energy investment. She points out that they are moving away from Big Oil and focusing on other energy stocks:
We've been involved in the oil trade for a long time, and we are not overweight oil anymore. We are shifting our emphasis to natural-gas companies.
However, this doesn't mean that oil companies are out of the energy investment picture. She continues in the Barron's interview:
We favor the smaller speciality companies, like Murphy Oil (MUR), which will benefit more from its exploration and production activities. Murphy is just bringing on production in Malaysia that they found about six years ago, and it is a huge field.
So is natural gas the next on the list for energy investment? After all, the above-mentioned Malaysia has rather large natural gas reserves and this could mean greater success for companies that diversify beyond pumping oil to exploration and things like natural gas. Additionally, continued interest in alternative energy investing could mean that Big Oil's days are numbered (but still in decades, mind you).
Big Oil companies are still strong fundamentally and they are turning around, making solid gains on the stock market after some volatility last week. Plus, with some analysts predicting $100 a barrel oil by early next year, it appears that there is still plenty of room for Big Oil to enjoy continued profits, especially since the news of increasing oil prices will lead consumers to expect higher gas prices and relieve Big Oil of worries concerning price gouging.
Disclosure: I do not own stock in Big Oil. I am not investing in WHG either.