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The Hottest Sector of 2018

Investors have been ignoring the energy sector for at least three years. Can you blame them?

The energy stocks plunged to multi-year lows in 2016 and 2017 as crude fell into the $30s. Oil analysts were forecasting even more doom, with some predicting crude would fall under $20 a barrel.

It never did.

The energy stocks have recovered from the sell-off in fits and starts during that time, with at least one false bottom.

But now, in mid-2018, it appears, with crude above $70 a barrel for the first time in 3 ½ years and the stocks on a tear, that the worst is over.

If this is the beginning of the big energy turnaround, where do you want to invest?

Where to Invest? Many Different Energy Choices

1. Refiners: They have the best record year-to-date. The average return on those stocks is 23.5%.
2. Explorers & Producers (E&Ps)
3. Drillers
4. Services
5. Integrateds (aka Big Oil)

Where you invest will be determined by your risk tolerance and goals.

But here are 5 stocks that have solid Zacks Ranks and earnings are exploding higher.

Energy Stocks to Buy Now

1. Anadarko Petroleum (APC - Free Report) is one of the larger E&P companies with a market cap of $37.3 billion. It’s in the midst of a $3 billion share buyback and it hiked its dividend, which currently yields 1.5%. Shares are up 32% year-to-date but earnings are expected to rise 229%. It’s a Zacks Rank #1 (Strong Buy).
2. WildHorse Resource Development (WRD - Free Report) is a mid-cap E&P based in Texas. It drills in the Eagle Ford and Northern Louisiana. Shares are up 45% year-to-date but earnings are expected to jump 290% year-over-year. It’s also a Zacks Rank #1 (Strong Buy).
3. Lonestar Resources (LONE - Free Report) has a market cap of just $175 million. It’s an E&P which drills in the Eagle Ford. The company recently raised its full year production guidance after a strong start to 2018. It sees more active drilling in 2018. The insiders have been buying more shares in April and May 2018.
4. Pioneer Natural Resources (PXD - Free Report) is another big cap E&P. It specializes in the Permian Basin. Sheraz has recommended it as one of his top energy picks for the last two years. Earnings are expected to jump 212% year-over-year. Shares are up 17% year-to-date.
5. Chevron (CVX - Free Report) is one of the big integrated oil companies. Shares are up only about 2% year-to-date but are up well off their 2018 lows. Earnings are expected to rise 101% in 2018. Is this a buying opportunity in big oil?