When investing in the stock market, choosing the right sector to invest in at the right time is essential if you want to be profitable over time. But it isn't always easy... one way to maximize your chance of success is to look at popular market trends. For example, the energy industry is among the most popular sectors to invest in at present. That's why many investors are wondering if it's a good time to invest in this industry, and what the best energy stocks to watch right now are.
While the global outlook is still uncertain due to Covid-19, one thing is for sure: we need energy in our daily lives to commute to work, to heat and cool our homes, and to do most of the daily tasks asked of us in our jobs. That's why energy stocks - which represent companies producing or distributing energy sources such as oil, natural gas, electricity, and renewable energy - are popular, because they're an important part of the global economy!
Usually, when economies are doing well, the energy sector also does well due to high demand. With Covid-19 and all the lockdown and travel restriction measures, economies around the world have slowed down, which has strongly impacted the demand for energy like oil. However, things are changing in 2021, with a brighter, more promising future, especially when it comes to 'classic energy' demand. But there is one sub-sector of the energy industry that has been booming in recent years - the renewable energy sector.
The renewable energy, or "green" sector, is stronger than ever, according to the International Energy Agency (IEA), with the increasing production and consumption of renewables that will likely become the 'new normal' in the coming years.
For Fatih Birol, the Executive Director of the IEA, wind and solar power is breaking record after record when it comes to reaching their climate goals, and governments should focus on these green technologies to include them in their infrastructure to reach the carbon neutrality and climate goals they've promised. He added that 'hydropower, bioenergy and geothermal' are among other key renewable technologies that could help expand the use of clean electricity.
Clean energy is great for many reasons. It provides energy that doesn't produce greenhouse gas emissions, and it also supports the use of a source of energy that reduces air pollution, while diversifying energy supply and reducing other countries' dependency on imported energy. That's why it can provide great investment returns if you know how to find good energy stocks.
The energy sector is one with a range of actors operating within it, which means that there are many options you can take advantage of. You can invest in large multinationals, but you can also target smaller companies through penny stocks for instance. You can focus on companies that generate, produce, distribute, or sell energy, but you can also focus on firms trying to provide technologies or materials to these companies. So, there are great possibilities for you to take advantage of the energy sector, depending on your trading strategy and goals.
* This is a contributed article and this content does not necessarily represent the views of sciencetimes.com
