Diverse Opportunities in Energy Investing
The energy industry these days offers a plethora of opportunities to all types of investors. People who are not comfortable with high risk can place their money in companies that are essential to energy, but do not necessarily wax and wane with oil and gas prices. A storage facility, a trucking company that transports the product, or a supplier of drilling pipes has more stable returns because their profits are not tied to the price per barrel of oil, or current natural gas prices. Those companies provide the same services regardless of the volatility of the commodity pricing. Investors can also place their money in emerging energy sources, such as solar and wind energy. Returns may be slower, but the stock has the potential to result in high gains when sustainable energy becomes more widely used.
People comfortable with high risk are better suited to endure the highs and lows of a commodity on a long term basis. Oil prices have a history of both slumping and rising quickly. Keeping stocks over decades typically evens out the roller coaster aspect of major energy investments. High risks can also make investors rich fast. Many investors are comfortable with high risk because they like this idea of getting in on an opportunity early, and cashing in when prices spike sharply. A recent example is the increase in fracking to extract shale oil deposits. Investors who bought stocks in many of the small companies that developed the drilling technology, provide the chemicals needed to fracture rock formations, and discovered large deposits enjoyed substantial gains.
Investors just beginning to develop a strategy can purchase lower priced stocks to see how they perform. If the company fails, the investor has learned a valuable lesson without losing a significant amount of money. Experienced investors are more likely to invest in companies with higher costs per share that have provided high returns in the past. The confidence comes from years of analyzing reports, watching market trends, and knowing how world events can affect some commodities. New opportunities are emerging with companies attempting to solve the storage issue surrounding solar and wind power. Many are experimenting with different materials for batteries efficient enough to store power when the sun or wind is not present.