Most investors who are looking to purchase stock in the oil industry instantly think of those companies that are involved in the drilling of wells and the refining of crude oil. Though profitable, they are often susceptible to fluctuations as the value of oil changes. While not as often discussed, companies that transport oil can provide steep returns for investors without the unpredictability associated with typical oil companies. Here are just a few of the many reasons why investors are selling oil company stocks and moving their money to transportation firms.
Oil Needs To Be Moved
No matter what the price of oil may do, it needs to be transported. Most oil companies will experience losses as the price per barrel drops, but a company that carries oil is provided with a buffer against these fluctuations. In fact, in times of low oil prices, transportation companies tend to do better and provide their investors with unprecedented returns. Add an oil transportation company to a portfolio and create stable diversity with a proven track record.
Avoid Market Fluctuations
Even under poor market conditions consumers will still purchase oil. This means that even when other industries experience a decline in business, the demand for oil remains constant. An investment that avoids these market fluctuations can help provide stable returns and are perfect for those seeking quick growth. Others may panic when the stock market drops, but individuals that invested in the transportation industry are often protected.
Limited Market Entry
The start-up costs associated with entering the oil transportation market are exponential. As a result, the threat of new companies entering the market is slim. This allows existing companies to corner the market and expand to meet changing demands. These two factors make investing in an established oil transportation company a perfect option … Read More ...