Best oil stocks to invest in 2021 | How to research them yourself

Best oil stocks to invest in 2021

/ 12:22 PM March 09, 2021

Investors are looking for the best oil stocks for their 2021 portfolio. Many economies worldwide are inching toward recovery, but others continue their descent. Nevertheless, savvy investors see an opportunity during the economic downturn. Should you heed the trend and purchase oil stocks too?

To answer these questions, we’ll begin by explaining the bullish outlook for oil stocks. Then, we’ll show some of the recommended oil stocks for 2021. Afterward, we’ll discuss the lingering risks to these investments. More importantly, we’ll explain how you can choose your stocks wisely.

Investing in stocks involves an awareness of the potential benefits and risks for every option. That’s why we’ll explain the reasons why some are bearish or bullish about oil stocks. We’ll also show some of the recommended oil stocks this year. Nevertheless, you should study and choose your stocks yourself.

Why more people are investing in oil and gas companies

Why more people are investing in oil and gas companies

The detrimental impact of the COVID-19 pandemic goes beyond public health. Specifically, it severely disrupted the global economy.

The coronavirus prompted governments to issue lockdowns around the world. As a result, countries experienced widespread job losses and business closures.

This impacted crude oil and natural gas companies as well. The pandemic significantly reduced vehicle traffic worldwide, so the world’s oil demand severely plummeted.


Consequently, energy sector stocks have fallen drastically as well. However, some investors are eager to snag these while the share prices are meager.

Moreover, they view the best oil stocks as underdogs. They believe that oil stocks would rebound significantly once the earnings usually flow again.

On the other hand, skeptics believe that some oil companies may not outlast the pandemic. After all, the return to normalcy remains uncertain despite the vaccine rollouts.


This means investors may not receive a return on investment for several years. In response, some ignore gas stocks and pour funds on more secure investments.

Top oil stocks to buy in 2021

Top oil stocks to buy in 2021

According to U.S. News & World Report, 7 energy stocks are a great buy for this year. Some energy companies are bouncing back along with the economy.

For instance, Pioneer Natural Resources is said to be handling the market downturn effectively. This could be a promising addition to your portfolio, but be wary of the potential risks.

However, some investors aren’t too keen on investing in the so-called best oil stocks. For example, they’re reluctant for Exxon Mobil due to its growing production problems.

Nevertheless, their future performance remains to be seen throughout the year. Here are some of the best oil stocks for 2021 recommended by US News:

1. Chevron Corp. (CVX)
2. Suncor Energy (SU)
3. Magellan Midstream Partners (MMP)
4. Enterprise Products Partners (EPD)
5. BP (BP)
6. Cheniere Energy (LNG)
7. EOG Resources (EOG)

Current risks to oil stocks

Current risks to oil stocks

After seeing the best oil stocks, you might be eager to invest immediately. However, you should be aware of the potential risks to those options.

As we’ve mentioned, the coronavirus pandemic brings uncertainty for the oil industry. People are optimistic about the recent vaccine rollouts, but it’s unknown when normalcy will return.

If the economy doesn’t fully recover soon, this could hurt oil company earnings. Eventually, investors may receive lower dividend yields.

Other outside factors could damage even the best oil stocks. For instance, oil shipments may spill en route to their delivery destination.

One of the most well-known incidents was the Deepwater Horizon oil spill. Not only did it crash the British Petroleum (BP) share price, it caused a colossal PR disaster that lasted many years.

However, you shouldn’t paralyze your investment strategy due to the potential risks. You’ll have to deal with the possibility of failure no matter where you invest.

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How to plan your investments

How to plan your investments

Now that you know the best oil stocks, how should you invest? Should you trust the Wall Street trends? Should you refer to the S&P 500 as a guide for your portfolio additions?

Even the most famous investors like Warren Buffett make mistakes. Some believe he reads Wall Street like a book, but even the Oracle of Omaha could misinterpret the market.

On the other hand, the S&P 500 has its limits. Investors use it to assess the overall market, but it doesn’t represent it completely.

How should you invest then? Here are some tips for choosing stocks:

1. Research your options carefully – Learn about a company thoroughly before investing. If it’s likely to grow in the future, you may want to invest.
2. Diversify your portfolio – Don’t just invest in the best oil stocks. Allocate funds for other kinds of investments to mitigate potential losses.
3. Compare the company with its competitors – You might find other companies in the same industry that have a better potential for growth.
4. Check if the company is earning – If it isn’t, it’s probably inadvisable to invest.

Final thoughts

You can find many online recommendations for the best oil stocks for 2021. However, you should have a long-term investment strategy first.

Don’t just rely on short-term factors such as rumors or oil prices. Instead, take time to understand the industry and the companies. This helps you choose the best oil stocks yourself.

Besides looking for additions to your portfolio, you should learn how to trade stocks online. Learn the tools you need to start investing, such as the newest trading platforms.

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