With the oil price sinking through the US$70 a barrel mark last week, investors across the spectrum of the energy sector will almost certainly be licking their wounds.
Leading oil and gas companies including Santos Ltd (ASX: STO), Origin Energy Ltd (ASX: ORG) and Beach Energy Ltd (ASX: BPT) fell 16.5%, 8.2% and 9.7% respectively over the week. One of the few stocks in the sector to hold up was Woodside Petroleum Limited (ASX: WPL) which ended the week flat. For comparison, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) actually gained 0.5% over the five trading sessions.
While the fall in "black gold" will put a strain on both oil and gas producers there will be winners too.
Some of those winners will undoubtedly be low cost, strong balance sheet oil producers who survive the current market volatility – smaller, higher cost and less secure producers and explorers could face a particularly challenging period.
As such there will undoubtedly be opportunities to pick up some beaten-down energy stocks, however this won't be for the faint hearted.
So it could be well worth investors keeping an eye on this space, right now however, investors looking for an opportunity to trade on some positive momentum may be better off focussing on the transportation sector.
An easier bet
Consider for example Qantas Airways Limited (ASX: QAN), Virgin Australia Holdings Ltd (ASX: VAH) and Toll Holdings Limited (ASX: TOL). All three companies are set to benefit from lower input expenses which should boost their profit lines. Qantas' share price has already reacted to this scenario with the stock up over 9% last week and nearly 40% in the past three months. Virgin and Toll meanwhile haven't rallied to the same degree which could make them better investment opportunities at current prices and worthy of further research by investors.