10 Dynamic Energy Stocks to Consider for the Next 20 Years

I think it's fair to say that predicting what's going to be around ten years from now is a pretty difficult task. Unfortunately, it's imperative when choosing your investments. What we do know is that we are going to need energy today, tomorrow, and in 2020. What kind of energy is going to be the leader in market share is not known, so we need to diversify. The world's economy is perpetually expanding over the long term, whether it looks like that now or not. The global demand for energy is going to be significantly more in 10 years than it is now.

Take a look for yourself:

Given those numbers, we know we are going to need one of the following:

• An enormous, abundant source of one type of fuel.
• A combination of several, economically viable sources of energy.

My guess is for the latter to be our solution; none of our current sources have the perfect mix of economic viability, environmental friendliness, and safety.

We currently have the following sources of energy at our disposal:

• Crude oil
• Natural gas
• Solar
• Wind
• Geothermal
• Nuclear
• Coal
• Biomass
• Hydropower

Crude - Currently our cheapest and most readily abundant source of energy. The reserves of "black gold" however are declining, and our need for it is on a steady ascent. Sure, we can deny that, but it won't make the problem go away. I don't know if we'll run out of it. These researchers believe it may happen in 2041. I'm not sure if we'll run out, but the drastic increase in crude prices over the last twenty years show that demand is increasing and supply can't keep up. At this pace, we will most certainly reach a point where oil is not ecnomically viable for the demands of the global economy.

Right now, "demand destruction" seems to occur at about $115.00 USD per barrel. $115 a barrel may become the norm in the semi-near future. In addition, there is a lot of fear about global climate change, and who knows what awaits us in that arena. We may come to a tipping point where we have to stop our habit to pollute. Heck, that might be now. Regardless, while oil will most likely remain to be the major player in the energy space, its days of having a monopoly are over.

Natural Gas - Relatively cleaner than crude or coal, and America has a lot of natural gas. I urge you to read this excellent article from a member of the Seeking Alpha Community on the price comparison of gas to crude. In summary, natural gas is significantly cheaper than crude, and there's a lot of it. Several companies are increasing output, and there are several other huge projects in shale, fracking, etc. This will most likely be a big player in the energy market of the future. There has also been a lot of talk about natural gas cars being the wave of the future. We'll see.

Nuclear - Totally clean, efficient, cheap, what else could you ask for? The Japanese crisis of early 2011 showed the true dangers of nuclear. It also set off many European countries to shut down plans for nuclear growth, and many have sworn off the stuff. While they say that now, its efficiency may cause them to rethink later down the line. Despite its benefits, it has lost its political momentum and has major headwinds.

Solar - I want to love solar. The idea of using the sun to power the world is very simple, yet brilliant. Unfortunately, it turns out that it's pretty hard to get the cost down enough to make it a viable source of major energy. It does work at certain levels, but will most likely not be our path to sustainability on a mass level. Either way, the best companies in the solar space do have some room to grow, and they're worth having in your energy portfolio.

Now for the stocks. I recommend having a diverse group of companies that operate in different industries within the energy sector. Diversity here won't diminish your returns, as much as it will aid you. It is a necessity given the unpredictable nature of future energy policy.

ExxonMobil (XOM) - Not the most exciting, but at cheap valuation (trailing P/E of 11), 2.4% current dividend with a 5 year average of 8% dividend increases (and only a 24% payout ratio), XOM is a good way to take advantage of rising oil prices. Exxon is also not a pure crude play as it has exposure to natural gas.

Chevron (CVX) - Again, very low growth expectations. The 3% dividend, 8.5% five year dividend growth, and low payout ratio make the stock a great way to follow the rising price of oil over the next several years.

Schlumberger (SLB) - SLB handles a diverse range of businesses. Their services to companies' exploratory plans are a large portion of their business. As the demand for oil rises, SLB will profit handsomely as the demand for their services and equipment ascends accordingly. In addition, its 20% growth estimates make it a nice growth play.

Halliburton (HAL) - One of Schlumberger's biggest competitors, Halliburton has benefited from the oil service industry's growth. Considering that HAL is currently showing a 0.66 PEG ratio and a forward P/E of 11.7, HAL is another good way to invest in the rise in global demand.

Clean Harbors (CLH) - Clean Harbors is a very interesting derivative play on the growth of oil companies. The more oil and gas companies have to drill, frack, etc., the more business Clean Harbors gets. They clean up waste as a result of the oil and gas industries' productions, and are a major solution to the fracking issue.

Chesapeake Energy (CHK) - More risk than others above, and management has yet to really execute. Regardless, CHK is a part of major shale plays such as the Marcellus shale opportunity. This is primarily a natural gas investment with the potential for nice gains, but it's really up to management to execute. Exercise caution.

First Solar (FSLR) - A maker of solar panels and solar energy provider, First Solar is arguably the best, most efficient and established pure solar company in the world. It has the potential for large growth, but it is still dependent on subsidies in the intermediate term. First Solar is approaching an efficiency level, however, that would allow it to be self-sustaining. I explain in detail here.

American Superconductor (AMSC) - It's probably worth it to have a cheaper, low risk wind stock in your portfolio. Wind will almost definitely not be the major player in the energy space years from now, but it should play a bigger role than it does currently. It has very lofty EPS growth expectations of 35%, and is trading about $6.50.

Tesla Motors (TSLA) - Not an energy stock, and also not profitable yet, but the potential in the electric car space in immense. If they can make the price worth the technology, or the price of oil makes it a viable solution, this could take off. The true value of Tesla may lie in its partnerships with other companies, like Toyota (TM).

LSB Industries (LXU) - Sells geothermal and water source heat pumps, and other HVAC products. A good play on very alternative energies. Already profitable and solid growth estimates

In addition to these stocks, one of the best alternative energy ETFs to invest in is PBD. It will provide you with diversification in the alternative energy industry.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.