The Best Energy Stocks for 2014


Photo credit: SandRidge Energy

Oil production in the U.S. is expected to grow over the next few years. According to the U.S. Energy Information Agency, by 2016 America could top its historical high of 9.6 million barrels per day set in 1970. That means American energy production is a great place for investors to be over the next few years. Below are the four best energy stocks to play this boom in the year ahead.

Best Energy stock for America's energy boom: EOG Resources Inc.
There are a number of ways to invest in the American oil boom, but EOG Resources just might be the best energy stock in America. It has a dominant position in the Eagle Ford Shale as well as solid positions in the Bakken Shale and Permian Basin. Because of this, EOG Resources expects to deliver best-in-class oil production growth over the next few years. In fact, by 2018 EOG Resources could be the top oil producer in America.

Best energy stock for a value:SandRidge Energy Inc.
While SandRidge Energy doesn't have a top-tier position in all of the hot oil plays like EOG Resources, it does have a great position in an emerging oil play. The company has consistently grown its production from that play and is getting better at driving returns. The problem is that investors have missed the fact that SandRidge Energy has really turned a corner. That has its stock so undervalued that one billionaire thinks it could easily double. That potential makes it one of the best energy stocks to buy for investors digging for value in 2014.

Best energy stock for growth and value:ConocoPhillips
Investors looking for a great energy stock that combines growth and value as well as operations in the U.S. and around the world need to look no further than ConocoPhillips. The company has a plan in place to grow both its production and margins by 3%-5% annually through 2017. On top of that it pays a very generous 4% dividend. Further, the company offers international growth, as 45% of its 2014 capital budget will be spent outside the U.S. Add it all up and ConocoPhillips is a great all-around energy stock and the perfect energy stock to add to a retirement account.

Best energy stock for income:LINN Energy LLC
Speaking of generous dividends, LINN Energy is one of the best energy stocks for income investors. The oil and gas MLP has a 9.5% yield and it pays its investors on a monthly basis instead of each quarter. The company recently completed a transformational deal that really pushed its production toward higher margin oil. That oil production should enable LINN Energy to boost its payout to investors in 2014. Not only that but LINN Energy is always on the lookout for future deals to add more fuel to its distribution increases. Bottom line, LINN Energy is one of the best energy stocks for income-seeking investors.

Investor takeaway
There really is an energy stock for every investor's portfolio. In fact, I'd go as far as to say that every investor should have an energy stock in their portfolio as America's energy boom really is producing some serious profits for American investors. Best of all, these profits in 2014 will be at OPEC's expense.

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Fool contributor Matt DiLallo owns shares of ConocoPhillips, Linn Energy, LLC, and SandRidge Energy. Matt DiLallo has the following options: short January 2014 $6 puts on SandRidge Energy. The Motley Fool owns shares of EOG Resources. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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