In general, oil stocks are extremely profitable, but it is their volatile nature that can be risky for investors. The best way to invest in oil stocks is through common stocks. According to experts, oil reserves are running out, but the demand for oil has not decreased. In fact, the demand for oil has increased tremendously as the emerging economies of Southeast Asia grow. These two factors have caused the price of oil to skyrocket. On the other hand, oil companies continue to have more or less the same operating costs even though the cost of raw materials has increased marginally. Therefore, the overall revenue earned by oil companies is more than it was a few years ago. This means that if you invest in oil stocks, you will get a better dividend due to the higher income earned by the company and the high price of oil in the global market.
While most oil companies are doing well and you can invest in any of them, there are some that are doing better than others. Before investing, you should find out the company’s revenue, the number of units sold in the last 5 years, the source of the raw material, the source of income, the size of the company, the image of the company, the policies of dividend payment. and any recent merger, acquisition or sale. Knowing this information will allow you to get an idea of the company and its stability. Also, check out the company’s annual report and expert opinions on the company and its future.
However, as mentioned above, there are some oil stocks that perform better than others. So, these are the companies you should consider. The oil stocks to invest in 2011 are the following:
VAALCO Energy Inc: This is an extremely stable stock and the company is experiencing a gradual increase in revenue. This stock is perfect for people looking for long-term investments.
Plains Exploration and Production – Although a new entrant, the company has good revenue prospects. The company is engaged in the production of petrochemicals and natural gas. This is the best time to buy shares of the company as there are signs in the future that the share price will rise.
Occidental Petroleum: This is a large company that has operations in the Middle East, North Africa, and South America. The company has been around for a long time and has a history of consistently making a profit. The company offers excellent dividend payouts and this makes it one of the best oil stock investments in 2011.
Chevron Corporation: The company has been around for some time and is considered one of the best companies to invest in. Experts predict that the dividend payout will be high this year and therefore its stock will be worth investing in.