OLE! - OIL AINT GONNA STAY DOWN - Petro Canada

OUCH - After a dog’s day on Tuesday, July 24, a “bargain-hunting” recovery on Wednesday, and a global rush to the exits today, Thursday July 26th; as stocks fall hard, and gains start to evaporate, it’s hard to be bullish. As I have preached before, its good to be prepared for days like these by keeping your portfolio diversified. Even still, its hard to be completely unaffected by this sell-off.

As recently as July 16 I wrote, "The conventional wisdom is that when the commodity boom starts to fizzle and interest rates start to shrink the financials' massive profitability, move to big-cap, high dividend paying stocks. Many are predicting just that scenario of the commodity boom's bust and lack-luster financial institution performance, and to be fair, it never hurts to be cautious." You don’t have to be Nastrudamus to predict an end to the market's five year bull run (you'll be right eventually), but I still say OIL as a commodity is a safe bet and the stock market is a good place to be - Ole! The bull rush will continue.

For now, the bears are everywhere. However, its good to keep your head straight - no need to play dead when confronting these bears. As the US housing market and mortgage situation causes a lot of jitters, one thing remains a sure thing in my mind: It may dip down, flirt with the psychedelic 60s, or the disco 70s ($60 - $70 per barrel), but as time goes on, oil, the black gold, will trend upwards and years from now it will be selling for triple digits. Welcome to the 21st century.

Since oil is going to trend higher long-term, I think it makes sense to have some oil exposure in your portfolio. Petro Canada (PCA) is a Canadian integrated that I like and own - it trades on the TSX (Toronto Stock Exchange). I would take down days like these to pick some up if I didn’t already own enough (and hadn't already bought it much lower). After posting record earnings it joined the sell-off today, and is down as of this writing about 3.25 % for the day. If you are looking for a safe oil play, Petro Canada is a solid Canadian company.

Check-out Petro-Canada on Google Finance.

Petro-Canada is an integrated oil and gas company with a portfolio of businesses spanning both "the upstream and downstream sectors of the industry." Petro-Canada explores for, develops, produces and markets crude oil, natural gas liquids (NGL) and natural gas in Canada and internationally. They also refine crude oil and other feedstock, and market and distribute petroleum products and related goods and services, primarily in Canada. Petro Canada is also an Alberta oil-sands play and this bodes well for the future of the stock.

Petro Canada is not a growth story: analysts have low growth expectations compared to its peers, however, Petro Canada does have one of the hightest return on equities compared to its peer group. I predict good things for this sector in general, and in addition to oil going higher and higher, I am cuatiously optimistic about natural gas picking up as well. As a conservative investor, I like this stock.

Lastly, one of the best things about owning an oil stock is that it is a hedge on gasoline. When oil goes down, gas prices go down, and assuming you drive a car, you win at the pump. When oil prices go up, your oil stock goes up and it makes pumping gas at a higher price a lot easier. All I can say is, get used to higher gasoline prices.

DISCLOSURE: I own shares in Petro-Canada. Always do your own research before you cough up $$$. Don't take anybody's word on anything.