The Fool's Top 5 Energy Stocks For 2012

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Includes: BTUUQ, KMI, SLB, SPWR, UPLMQ
by: MyPlanIQ

As we get into 2012 with the continuing financial crisis over our heads, we continue to look for ideas that we can use to build the best long-term portfolio possible. I believe that Energy is a vital component to a commodities asset class and commodities are going to be important as inflation is going to be an unpleasant reality for some time to come.

Dan Dzombak outlines the Motley Fool's 2012 energy selections. We are going to build a portfolio from its selection and compare it with our benchmark dividend bearing ETF portfolio

Its top energy stocks are:

  • Peabody Energy (BTU) Coal
  • Kinder Morgan (NYSE:KMI) Oil and Gas
  • SunPower (NASDAQ:SPWR) Solar
  • Schlumberger (NYSE:SLB) Oil Field Services
  • Ultra Petroleum (UPL) Natural Gas

This may not be attractive today but is worth tracking to see whether there is a point that this may be useful.

Asset Fund in this portfolio
REAL ESTATE (NYSEARCA:ICF) iShares Cohen & Steers Realty Majors
CASH CASH
FIXED INCOME (NYSEARCA:TIP) iShares Barclays TIPS Bond
Emerging Market (NYSEARCA:VWO) Vanguard Emerging Markets Stock ETF
US EQUITY (NYSEARCA:DVY) iShares Dow Jones Select Dividend Index
US EQUITY (NYSEARCA:VIG) Vanguard Dividend Appreciation ETF
INTERNATIONAL EQUITY (NYSEARCA:IDV) iShares Dow Jones Intl Select Div Idx
High Yield Bond (NYSEARCA:HYG) iShares iBoxx $ High Yield Corporate Bd
INTERNATIONAL BONDS (NYSEARCA:EMB) iShares JPMorgan USD Emerg Markets Bond
Click to enlarge

Portfolio Performance Comparison

Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
Retirement Income ETFs Tactical Asset Allocation Moderate 1% 9% 9% 72% 8% 55%
Retirement Income ETFs Strategic Asset Allocation Moderate 1% 6% 16% 98% 2% 7%
The Fool`s Top 5 Energy Stocks for 2012
Click to enlarge

The table gives us nothing as the selection has been around since February 2011. However, it should be an interesting metric going forward.

Fund in this portfolio Percentage

Peabody Energy Coal

16.87%

Kinder Morgan Oil and Gas

32.00%

SunPower Solar

12.94%

Schlumberger Oil Field Services

23.61%

Ultra Petroleum Natural Gas

14.58%
Click to enlarge

We note that in the 11 months of its existence, oil and gas and their associated services are leading the way followed by natural gas and solar. It will be interesting to see how the selection moves as we get deeper into the year.

Three Month Chart One Year Chart Three Year Chart Five Year Chart

As we look at the short history, it is not a pretty sight. Energy stocks have been under pressure as part of the commodities sector that has seen drops of late. However, this might be a useful set to keep around and to continue to track as commodities come back into favor.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.