Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
If you’re not investing in ETFs or actively managed funds, you’ll need to pick stocks yourself. This involves selecting undervalued, oversold, or rapidly growing stocks with the help of stock-picking tools, according to your investment style. However, stock picking is a professional skill, and getting it right isn’t easy. There’s a compromise, though: start by choosing the right industry, which significantly reduces the complexity of stock picking.
Selecting the right industry sets you in the right direction. Many industries are cyclical, meaning when an industry is in an uptrend, even if individual stocks perform moderately, the overall investment returns can be substantial. Additionally, technological innovations, policy changes, and shifts in social demand can drive industry growth, such as in new energy, artificial intelligence, and biotechnology, which have been popular in recent years. Furthermore, many institutions have professional analysis teams dedicated to specific industries, greatly reducing the research burden on individual investors.
While picking specific stocks is important, in a highly volatile and risky market environment, choosing an industry with a generally positive outlook can offer more stable investment returns. For investors, keeping an eye on industry dynamics and understanding industry development trends can help make wiser investment decisions.
In November, considering the current geopolitical and economic environment, the gold and energy sectors are worth particular attention.
The recent rally in gold prices has lasted for five months, significantly boosting Canadian gold mining stocks. For example, Vancouver-based B2Gold (TSX:BTO) saw its stock price rise over 13% in the past four weeks and continues to trend upward.
Many experts believe the current rise in gold prices is driven by geopolitical instability and economic uncertainty. Gold is a safe-haven asset that maintains stable value even when currencies and other assets face negative market fluctuations. Additionally, a low-interest-rate environment reduces the opportunity cost of holding gold, potentially increasing its appeal. The Federal Reserve has cut rates consecutively, leading Western investors to return to the ETF market for gold.
Therefore, if you’re looking to follow trends and benefit from price appreciation, Canadian gold stocks might be a better choice than energy stocks right now.
Over the past six months, the TSX Energy Index has fallen by about 6.75% and has been highly volatile most of the time. In contrast, Canadian energy stock Pembina Pipeline (TSX:PPL) saw its price rise by 20% in the same period. However, due to intensified geopolitical conflicts among major natural gas producers and a significant drop in natural gas prices, coupled with months of falling oil prices, even Pembina has faced challenges recently.
Nonetheless, compared to upstream and downstream companies in the energy sector, midstream companies like Pembina, which focus on energy transportation and pipelines, are relatively insensitive to energy prices and have a safer business model. Additionally, Pembina offers a dividend yield of close to 5%, providing attractive dividends. If you’re seeking dividend income, energy stocks with declining prices might be the better option.
