One energy stock to buy, two to consider

With $357 billion worth of small investor money sitting in cash, Wednesday's Dow poke-through to 10,000 ought to bring a large shift of cash into stocks. The question is where investors ought to put it. While it may make sense to just buy stock index funds, there are going to be people who prefer to buy individual stocks. As I posted, Goldman Sachs Group (GS) thinks that energy stocks will report faster-than-average revenue growth. So read on for three such stocks to consider.

Before describing my rationale for these picks, it's worth describing a handy measure I use to assess whether a stock is expensive. Unfortunately, it depends on earnings forecasts, and since I don't do these forecasts myself, I don't know how reliable they are. The measure is the Price/Earnings to Growth (PEG) ratio which divides a stock's P/E by its earnings growth rate. If the PEG is less than 1.0, I consider the stock relatively inexpensive.

The three energy stocks I see as worth evaluating are Chevron (CVX), ConocoPhillips (COP) and Exxon Mobil (XOM). Of these three, I think ConocoPhillips is the best bargain. Here's my assessment of each.