7 Stocks to Energize Your Portfolio

There's simply no denying how important energy is not only to our economy, but to our very existence. If we need it to live, your portfolio should have it, too. Below I've outlined seven stocks to diversify an energy-less portfolio.

The safe bet: ExxonMobil (NYSE: XOM)
Why not add America's largest company to your portfolio? OK, OK, size doesn't matter, but profits do! Exxon's profits in the third quarter were more than $10 billion, up more than $3 billion for the same period last year. Not revenue, mind you -- profit. Exxon's other stats look good as well. Debt-to-equity sits at 10%, return on equity is 27%, and it sports a solid 2.3% dividend yield.

Let's forget the numbers for a minute, though, and consider the company's strategy. Global presence? Check. Leader of domestic natural gas production? Check. Continuing ability to make discoveries in warm places and secure partnerships in cold ones? Check and check. This giant isn't slowing down any time soon and is a great addition to any portfolio.

The riskier move: Imperial Oil (AMEX: IMO)
Imperial Oil is a small exploration and production company operating north of the border. I call it the riskier move because it's not one of the big names we bring up often, and, as an American, it's my job to deem Canadian things inferior. But! This is actually a trick play, because ExxonMobil holds a 70% stake in this oil producer.

Imperial operates all across Canada, including in the ever-so-controversial yet lucrative Alberta oil sands, and the company really is top notch. It has had the highest return on capital employed of all its Canadian competitors for the last five years. In 2010, ROCE was 20.5%. Total debt-to-equity is even less than ExxonMobil's, at 9.18% for the most recent quarter. Finally, for those dividend lovers, while Imperial's yield isn't spectacular -- or even great (1%) -- the company has been paying a dividend for more than 100 years and has increased it annually for the last 17. There is something to be said for consistency.

The spade: Baker Hughes (NYSE: BHI)
Like selling shovels to 49ers during the gold rush, Baker Hughes is an oilfield services company that provides essential assistance to major integrated and independent oil and gas companies in their operations. The company provides exploration and production services, but it also assists in pipeline and refining operations. For the last 60 years, it has published industrywide rig counts, which means that Baker Hughes has its finger on the pulse of the entire oil and gas industry.

Though the company is not as big as competitors Schlumberger and Halliburton, it is trading at a discount right now. Analysts estimate that even after disappointing third-quarter margins in its international operations, the stock is 30% undervalued.

Baker Hughes expects international margins to rebound in the fourth quarter. In the meantime, North American operations are booming on the strength of increased rig counts in Canada, along with resumed operations in the Gulf of Mexico.

The toll road: Kinder Morgan (NYSE: KMI)
When Kinder Morgan's acquisition of El Paso closes, the pipeline company will be the fourth largest energy company in the U.S. Not bad for an operation that started in 1997 with basically just one pipeline. Success like that is impossible without effective management, and that's exactly what Kinder Morgan has in CEO Richard Kinder.

On top of excellent management, we all love to have options, and there are actually three ways to play this investment, depending on the needs of your portfolio. Kinder Morgan Management (NYSE: KMR) and Kinder Morgan Energy Partners (NYSE: KMP) also hold potential for investors interested in limited partnerships.

Kinder Morgan's 80,000 miles of pipelines are essential to the North American energy boom. As production continues to increase, expect Kinder Morgan to benefit handsomely.

The tangential play: Westport Innovations (Nasdaq: WPRT)
Westport Innovations makes engines that run on natural gas. Right now, the company's business is driven by fleet purchases, commercial trucks, and buses that run on the fuel. The nascent company reported revenue of $81 million for the most recent quarter. A small sum, but it marks an 80% increase over the same period last year.

The company's reported losses were twice what they were last year. That being said, the company has a significant number of relationships with the world's leading engine manufacturers, which bodes well for future growth.

Clean Energy Fuels (Nasdaq: CLNE) is another tangential play worth considering. This company provides the fuel for the same fleets Westport builds its engines for. The one advantage that Westport has over Clean Energy Fuels is that the company won't be affected by fluctuating prices in natural gas. Take a look at how both companies' share price has performed over the last year:

Clean Energy Fuels Stock Chart by YCharts.

The companies more or less tracked each other all year, right up until August when Westport began to pull away on the strength of its first-quarter results. Westport Innovations' stock has surged several times this year on the news of proposed congressional legislation, a marketing deal with Royal Dutch Shell, and its potential as a takeover target.

The hope for the future: SunPower (Nasdaq: SPWRA) (Nasdaq: SPWRB)
I fully believe solar is the future of energy, and while I can't say how far off that future is, that's no reason to ignore solar companies today. Relatively new to the field, I turned to resident solar expert Travis Hoium to kick-start my solar education.

SunPower is Travis' pick as the best solar stock. The company invests millions in research and development to improve the efficiency of its panels, but it also works to keep system installation costs down, allowing the company to offer lower overall costs in crucial markets like California, New Jersey, and Japan.

Adding to the legitimacy of a very solar future, global oil and gas powerhouse Total has $1 billion invested in SunPower.

Foolish takeaway
The energy industry offers a ton of options for investors looking to diversify their portfolios. If your portfolio is already chock-full of energy stocks (brilliant!) consider checking out 11 more ideas with The Fool's special free report "Secure Your Future With 11 Rock-Solid Dividend Stocks."