How to Analyze Energy Stocks

As the price of oil inches up energy stocks are becoming more attractive. But which energy stocks should you consider? Knowing how to analyze energy stocks is important in picking potential winners. Who is going to make a profit at $50 oil? When will large scale exploration and drilling resume? How will alternative energy stock fare as oil becomes cheaper. Where are niche markets in the energy sector? And, just how fast is the price of oil going to rise in world where many large economies are in or on the verge of recession?

Clean Energy Stocks

Usually clean energy like wind or solar prosper when the cost of oil and natural gas is high. So, as oil starts to go up how is the clean energy market doing? Bloomberg writes that clean energy will take a bigger share of the energy market by 2030.

Renewable energy will account for 40 percent of electricity output capacity by 2030, almost double today’s market share, according to the International Renewable Energy Agency.

The expansion will be due to lower technology costs, Adnan Amin, Irena’s director general, said in an interview on Bloomberg TV in Dubai. “We anticipate with the lower technology cost, by 2030 we’re going to have renewables capacity in the global power system at around 40 percent, which is quite remarkable growth.” That compares with 22 percent today, according to Irena.

The real challenge for renewables is capturing crude oil’s market share in heating, cooling and transportation products, Amin said. “As far as the power sector is concerned, oil plays a very little role in power generation worldwide” at about 5 percent, he said.

At a time when energy stocks are depressed across the board it is a buyer’s market. But you need to analyze energy stocks to decide which will have long term value. Current high end solar panels are from 11% to 15% efficient in converting sunlight energy into electric power. However, in the research lab 40% efficiency has been obtained.  As the Bloomberg article notes the expansion of the renewable energy sector will be driven by improvements in technology. Companies that can take the newest and best solar collectors and convert them into sellable products will grow.

Is Fracking Here to Stay?

Hydraulic fracturing or fracking for short is why the USA has hugely reduced oil and natural gas imports and shortly will be exporting again. However, fracking is expensive and many new operations are in trouble at lower oil prices. But the same argument used for clean energy might apply to fracking. Newer and better technology might make the process more efficient and profitable. Our suggestion is not to ignore fracking-related stocks as they may still be growth engines in the future.

Niche Markets

When there are problems at the bottom of the sea under an oil rig how do they deal with it? The Washington Post reported how robotic submarines capped a leaking oil pipe deep in the Gulf of Mexico. This is a niche market that will always have business as humans cannot operate thousands of feet below the surface of the sea.

How to Analyze Energy Stocks PPT

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