Whether they are investing in the retail, banking, tech or the energy sector, most investors are looking for investments that offer significant amounts of profit with the least amount of risk. To many long-term investors, this is the elusive trade that is difficult to come by and, in some cases, almost impossible to envision. However, there are stock options out there that fall into this category. It may take a bit of an unconventional mindset to discover these types of investments, but they can be had.
For example, the energy sector is the type of investment sector that is known for its volatility. In fact, most investors would agree that the energy sector is inherently volatile. Because the prices for energy, whether it’s natural gas or oil, can rise and fall dramatically in as little as 24 hours, it can oftentimes make it difficult for investors to look at long-term investments in the energy market that are stable. However, Master Limited Partnerships (MLP’s) are precisely the type of investments that are stable and provide excellent returns while still being in the energy sector.
What is unconventional about this type of investment is that the way that MLPs are profitable has little to do with the actual cost of an energy commodity. These are the types of companies that are entrusted with the transportation of an energy commodity from one location to another.
In essence, while it operates in the energy sector and it is connected with an energy commodity, the profitability of these companies have little to do with the actual price of the commodity. Whether it’s transporting gasoline from a refinery to a transfer station or it’s transporting unrefined energy commodities to a refinery facility, these businesses make their money on transportation services, not the capturing or the refining of energy commodities. This lends a great deal more stability than typical investments in the energy sector would typically provide.
Many investors are enticed by the types of profits that are made from the energy sector. However, they can easily be put off by the extreme volatility inherent to this market. Fortunately, with investments in MLPs, an investor can have the sort of returns that are common to an energy sector investment without the downside of extreme amounts of volatility and risk.