Six Winners with Oil at $100

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Includes: FTI, MON, NLR, PBD, PBR, SU
by: Matthew D. McCall

As oil flirts with $100, there are certain sectors that will benefit while others cringe at the thought of a triple-digit price per barrel. Some of the winners may be obvious while a few are secondary, less popular ideas.

Winners

  • Suncor Energy (NYSE:SU) is a Canadian oil and gas company that was the first to produce commercial crude oil from the Canadian oil sands. The company is currently producing 284,000 barrels per day of oil equivalent. What I like about SU is the exposure to the oil sands and the proximity to the US. With oil at $100 the government will be pressured to lessen our dependence on oil from the Middle East. With Canada to our north, why not increase the amount of oil derived from the oil sands?
  • FMC Technologies (NYSE:FTI) supplies subsea drilling and systems that are used for the production of oil and gas. The company is also involved in the high pressure fluid control products used in the energy industry. With oil at $100 it will result in hordes of cash on the books of the large energy companies. To appease the government and its shareholders, the companies will be forced to spend money on equipment and services. FTI will likely be one of the beneficiaries of the spending.
  • Petrobras (NYSE:PBR) is Brazil's largest industrial company and one of the largest oil companies in the world. PBR makes the list for two reasons. The demand for oil from emerging countries such as itself and China will continue with oil above $100 and PBR is positioned to remain a major supplier. In recent news the company announced a possible new oil discovery that could boost the country's oil reserves by as much as 50%. If it turns out the discovery can be drilled, PBR will quickly move up the ranks of top oil companies.
  • The PowerShares Global Clean Energy ETF (NYSE:PBD) is composed of a basket of alternative energy stocks that always find the spotlight when oil rises. Because many of the clean energy alternatives are expensive to implement, when oil rises to $100 they suddenly become more attractive. Add in the "green movement" around the globe and it is a no-brainer that money will be flowing into the clean energy stocks.
  • The Market Vectors Nuclear Energy ETF (NYSEARCA:NLR) might be a controversial investment for some, but the bottom line is that if the US wants to lessen its dependence on fossil fuels, more nuclear power plants must be built. Not only is nuclear power prevalent throughout the world, it has been proven to be safe and less harmful to the environment. NLR gives investors exposure to the nuclear energy industry through mining, infrastructure, and power generation stocks.
  • Monsanto (NYSE:MON) is an agriculture company whose products help farmers grow bigger and better crops. Through biotechnology the firm focuses on improving crops with seeds and herbicides. With oil at lofty levels it increases the demand for ethanol that requires big crops of corn. The farmers will look to companies such as MON to provide them with the products needed to produce large amount of corn and other crops.

Disclosure: The author's firm owns shares of MON