(La Jolla CA) With the price of petroleum hitting a six month high, stocks and sectors other than Big Oil are also prospering. There are other benefits to owning shares in these companies or ETFs, as they are not as exposed as an Exxon (NYSE: XOM ) or a British Petroleum (NYSE: BP) to the fluctuations in the price of crude. These stocks and sectors bring diversity and downside protection to a portfolio while still gaining when the cost of oil increases.
Canadian energy income trusts offer investors high yields, a currency hedge and a play on the price of oil. Penn West Energy Trust (NYSE: PWE), Baytex Energy Trust (NYSE: BTE), Pengrowth Energy Trust (NYSE: PGH) and Enerplus Resources Fund (NYSE: ERF) have to pay out earnings to shareholders. As a result, yields are often double digit: Penn West at 12.33% and Pengrowth Energy Trust at 12.96%, for example. As the price of oil climbs, so do the share prices. Canadian Energy Trusts also increase in value when the Canadian dollar is stronger against the US dollar. With the economic outlook indicating an increase in the price of oil along with a decline in the US dollar, Canadian energy trusts offer an upside potential on several fronts.
Fertilizer stocks such as Agrium (NYSE: AGU), Potash (NYSE: POT) rise with the price of oil, as petroleum is used in production. Over the past 18 months, these stocks have outperformed the main oil ETF (NYSE: USO).
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