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The world runs on energy. Many global industries have thrived due to companies generating massive amounts of energy, day in and day out. The energy produced from oil, natural gas, coal, solar, wind and nuclear resources has fueled the growth of developing and industrialized countries.
Companies from the energy sector can have a similar effect on your portfolio, provided that you invest your money behind them today. Here’s a comprehensive guide to help you invest in top-performing energy stocks on the market.
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Overview: Energy Stocks
There are 2 basic categories of energy stocks you can invest in — renewable and nonrenewable energy stocks.
Companies that produce and distribute energy generated from resources of limited availability such as coal, natural gas and oil are categorized as nonrenewable energy stocks. Businesses that generate revenue from the production and distribution of energy from unlimited resources such as solar, wind and hydropower plants are considered clean or renewable energy stocks.
Since there is tremendous demand for energy from countries all over the world, stocks from both of these energy sectors can become promising investments for you. Moreover, the recent developments in climate change and global warming may lead to a resurgence of clean energy stocks in the near future.
Best Online Brokers for Energy Stock
Sign up with an online broker to track and trade energy stocks at your convenience.
These platforms come equipped with a powerful stock screener for fast trading. You can apply custom filters to find stocks as per your financial goals. For instance, you could set a price range to display all the available stocks under $10 and get instant results.
Take a look at these premier online brokers to improve your trading strategy.
Features to Look for in Energy Stock
- Earnings Per Share: The earnings per share (EPS) of a stock is the measure of a company’s profitability. It is calculated by dividing the net income of a company by the number of its outstanding shares.
- Price-Earnings Ratio: The price-earnings ratio (P/E) is used to identify overpriced and undervalued stocks. The lower the P/E ratio, the more returns you are likely to make from the stock. Many stocks under $5 tend to have the lowest P/E ratios on the stock exchange.
- Dividend Yield: Many stocks from the energy sector attract long-term traders by giving quarterly or annual dividends to its shareholders. Keep a tab on the dividend rates every quarter to assess their profit potential.
Contribute to Cleaner Energy
Innovations from clean energy companies are making life safer and smarter. The judicious use of renewable energy is the need of the hour. And every dollar you invest in energy stocks with eco-friendly operations can prove to be precious in the future.
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