U.S. Markets closed

The Vega Factor: Think Small to Profit from Oil’s Big Volatility, Moors Says

Aaron Task
Editor in Chief
Fin - Daily Ticker - US

Dr. Kent Moors, a professor at Duquesne University and founding editor of The Oil and Energy Investor, predicts higher oil prices in the coming months, as detailed here.

For some investors, the knee-jerk reaction is to buy ExxonMobil, Chevron or other major integrated oil companies. "The big boys are going to make some money," Moors says. But he's also predicting increased volatility in oil prices — in both directions — "which requires you play the market a bit differently."

Specifically, he recommends medium- and smaller-sized energy companies that "know what they do well and stick to it," citing Basic Energy Services, a North American oil services firm, as an example.

With the emphasis on "bringing on as much new production as quickly as possible, the people who are going to make the money first are oil field services," says Moors, an international oil and gas policy expert and author of The Vega Factor.

While a fan of industry leader Schlumberger, Moors says a company like Basic Energy Services is less exposed to geopolitical risk than international giants like Schlumberger and Halliburton.

In addition, he recommends the Jefferies Wildcatters Exploration & Production ETF (WCAT) and the Guggenheim Canadian Energy Income ETF (ENY), which was previously named the Claymore/SWM Canadian Energy Income Index ETF.

These ETFs are the "best play" for retail investors because they "allow you to play the best medium- and small-sized companies without having to select among various companies," Moors says.

Disclosure: Moors does not personally own any of the stocks or ETFs mentioned here but does recommend them to clients.

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com