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By Mitchell Clark

The strength in this market is with oil, as both the spot price and oil stocks are holding up very well.

While the broader market has been experiencing a well-deserved price retrenchment, both large- and small-cap oil stocks have been on the comeback trail. The price strength is helpful, as speculative fervor continues to come out of equities. The performance illustrates how helpful sectoral portfolio diversification can be when asset prices fall.

ConocoPhillips (NYSE:COP) is not expensively priced, at approximately 9.5 times trailing earnings. The stock sold off significantly at the beginning of the year, but has since recovered nicely. Currently yielding just less than four percent, this oil and gas story is similar to the other big integrated energy companies: it isn't about production growth, but more about income for investors.

One company we've looked at several times in these pages is Kodiak Oil & Gas Corp. (NYSE:KOG). This is a Bakken oil play that's really doing well. This stock was consistently expensive, being a highly liquid favorite of institutional investors, but earnings have caught up to the share price, and the story is still intact. This junior energy producer still has a very bright future. The company's stock chart is featured below:

(click to enlarge)Chart courtesy of www.StockCharts.com

Energy consistently has a role to play in equity market portfolios, and it doesn't have to be pure-play production stories. In terms of resource investing, I find it much more attractive over precious metals, particularly for investors looking for some longevity in their holdings.

In an environment that's likely to remain slow-growing for several years, I like both the income and capital gains potential from oil stocks in pipelines, energy storage, processing and transmission.

Previously, we looked at Chart Industries, Inc. (NASDAQ:GTLS) out of Garfield Heights, Ohio. This is a business with good long-term fundamentals, and the stock is currently in its own downtrend, making it more attractive by the day. (See "This Energy Stock to Be Major Beneficiary of LNG Build-Out?")

Bakken oil is still a major growth story and an investment theme with more life. It's not the only play, of course, but the region still commands high recognition from institutional investors, which can make these stocks move with particular fervor.

A company like Kodiak Oil & Gas can move a lot higher on the stock market, so long as spot oil prices don't fall from current levels. Wall Street analysts are still revising their earnings estimates upward, and at 12 times its 2015 earnings, the position is not expensively priced like it used to be.

Everything depends on underlying commodity prices when it comes to resource investing, and oil's strength in the face of the recent sell-off in equities is quite surprising. Its resilience is a positive indicator in terms of sentiment in global capital markets.

Expectations for economic growth still tend to move in concert with oil prices, and the current spot price over WTI $100.00 a barrel is itself a vote of confidence in the prospects for economic activity this year.

Disclosure: None.

Source: Kodiak: My Top Energy Pick With Market-Defying Momentum