Monday, March 10, 2025

[Welcome] 50 Ways to Invest in the Energy Sector (2 of 6)

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Editor's Note: Every Tuesday in Wealthy Retirement, Chief Income Strategist Marc Lichtenfeld picks one specific topic in the financial world to discuss with you.

Past topics have included top dividend stocks, boxing, the Federal Reserve, Mick Jagger, bonds, misguided dinner guests, stock catalysts, psychology, his favorite sectors to invest in, and more.

Nothing is off-limits. If it can help you make money and take back control of your retirement, Marc just might write about it.

Today, I'm sharing with you one of my favorite Tuesday columns from Marc. It combines two things he's extremely passionate about - investing and music - and involves his favorite ways to invest in the energy sector.

That brings me to some other (more urgent) news...

Elon Musk projects that AI and its massive energy demand could soon crash our entire electrical grid...

And there's likely only one energy source that's capable of saving the day.

Click here to find out America's best hope of avoiding an AI energy catastrophe... and how savvy investors could potentially cash in big.

- James Ogletree, Managing Editor

50 Ways to Invest in the Energy Sector

Marc Lichtenfeld, Chief Income Strategist, The Oxford Club

Marc Lichtenfeld

In 1975, Paul Simon released his big hit "50 Ways to Leave Your Lover."

According to Simon's suggestions, you could...

  • Slip out the back, Jack.
  • Make a new plan, Stan.
  • Hop on the bus, Gus.

All with the goal to "get yourself free."

I've been bullish on the energy sector for quite a while now. One of the things I like about the sector besides the fundamentals - energy demand is increasing while supply is declining - is that (to borrow from Simon) there must be 50 ways to invest in the energy sector.

Just think about the different kinds of energy that are produced and consumed in the world. While there are many oil and gas companies to invest in, you can also buy coal stocks, utilities, renewable energy companies, and many others.

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The Energy Sector Has It All

Energy companies come in all sizes, from megacaps like Exxon Mobil (NYSE: XOM), which has a market cap around half a trillion dollars, to $7 million market cap Enservco (NYSE: ENSV), a Colorado-based company that provides oil well services.

There are many blue chip and quality companies, like Exxon Mobil and the other oil majors, for long-term and/or conservative investors.

For those who want to be paid a strong dividend every quarter, there are lots of master limited partnerships, like Sunoco LP (NYSE: SUN), which yields about 6%.

Investors interested in renewable energy can look at, among others, Hannon Armstrong Sustainable Infrastructure Capital (NYSE: HASI), a firm that invests in solar, wind, and other projects and sports a yield above 5%.

For speculators, there is a wide variety of choices. There are lots of low-priced energy stocks that trade for under $10, like Vaalco Energy (NYSE: EGY) and Uranium Energy (NYSE: UEC).

And, of course, there's one of the favorite tools of traders: call options. A call enables you to control 100 shares of stock while greatly lowering the amount of capital you have at risk. (You can find many for less than $5.)

For example, let's say you were interested in oil giant BP (NYSE: BP), formerly known as British Petroleum. The $110 billion market cap stock trades for around $40, so if you bought 100 shares, it would cost you around $4,000.

If you thought BP was going to go on a run over the next several months, you could buy the June 2025 $40 calls for $1.35, which would cost you only $135 to control the same 100 shares. If the trade didn't work out, the most you could lose would be $135. But if BP rose to just $45, your return would be well into the double digits in less than a year. And if the stock climbed to $50, you'd be up over 100%.

The energy sector offers something for every investor. So with apologies to Paul Simon, here's my "50 Ways to Invest in the Energy Sector"...

  • Pick up a stock low, Joe.
  • Grab a blue chip, Skip.
  • Buy a cheap call, Saul.

Incorporate one or more of these strategies, and you may "just get yourself [financially] free."

Good investing,

Marc

P.S. Should we make it 51? Here's a bonus...

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