GT Solar International Inc. (NASDAQ: SOLR), Halliburton Company (NYSE: HAL) and Plains Exploration & Production Company (NYSE: PXP) are three promising energy stocks that investors may want to consider holding over the next three to five years. Meanwhile, the recent pullback in energy prices has created an attractive entry point for investors looking to power up their portfolio returns.
While commodity prices have been driven up by higher demand (and inflationary concerns) over the past year, traders were recently spooked by new signs of slowing global economic growth in the U.S. and E.U. The PowerShares DB Energy Fund ETF (NYSE:DBE) is trading down nearly 8% over the past month, but up more than 12% year-to-date and 36% over the past 52-weeks.
Benefit from Domestic Drilling with Halliburton
With renewed volatility in the Middle East, oil prices are once again moving near $100 per barrel and threatening the economic recovery in the U.S. The result will likely be increasing political pressure to continue and extend drilling in the lucrative Gulf of Mexico. And, one of the key companies to profit from increased domestic oil production is Halliburton Company (HAL).
Recently, the oil and gas exploration company was upgraded to Overweight from Equal Weight by Morgan Stanley (NYSE:MS). The analyst believes that the firm should benefit from increased U.S. oil drilling activity, which will help reduce earnings volatility and ultimately increase risk-adjusted returns for investors. As a result, this may be one long-term stock to hold over the coming years.
Plains Exploration is Uniquely Positioned in the Industry
Plains Exploration & Production Company (PXP) is another oil exploration and production company that is well-positioned in the industry. After blowing away analyst projections last quarter, the company’s CEO indication that operational growth objectives are on track for 2011. The firm reported earnings of 37 cents per share, compared to 34 cent estimates, on revenues of $430 million, compared to $416 million estimates, during the first quarter.
Susquehanna analysts also indicated that the stock could be a potential acquisition candidate for Occidental Petroleum Corporation (NYSE:OXY). The analyst believes that Occidental may be interested in all or parts of Berry Petroleum (NASDAQ:BRY), Plains Exploration (PXP) and National Fuel’s (NYSE:NFG) Seneca unit, along with some smaller private players, as it may be planning to consolidate heavy oil assets in California.
Beyond Oil: The Future Looks Bright for Solar
Solar energy remains one of the most promising secular trends in the energy industry, as government subsidies boost adoption and falling prices enable the technology to scale. While ambitious Chinese shipping schedules will lead to near-term pain for some solar companies, many analysts agree that the sector appears to be very promising over the long-term, and many of these concerns are priced in.
With its recent increases in bookings, strong backlog, and spotless balance sheet, GT Solar International Inc. (SOLR) is one of the best plays in the industry. In fact, Brean Murray analysts recently raised their price target to $18.00 per share – a significant 54% premium over the current market price – after the company reported stronger-than-expected first quarter earnings results.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.