Stocks to combat energy price inflation

As my financial blog points out, investors can benefit from the recent rise in gasoline prices. Here are some stocks to consider if you want to hedge against these prices:

PetroChina (PTR) - With now less then 1% owned by Warren Buffet's Berkshire Hathaway (due mainly to increased purchasing), PetroChina remains an appealing play in the energy sector. Despite the doubling of its stock price over the past two years, PetroChina remains undervalued by most measures including a P/E over LT Growth of under 1. Despite earnings declines this past quarter, improvements in margins and consistently high ROE and ROA make this a solid play. Taking into account the estimate growth in fuel demand in China and developing Asia, PetroChina figures to remain one of the top players providing oil and gas for the region.

Valero Energy (VLO) - A large-cap refining, marketing and distribution play that remains drastically undervalued despite a YTD increase of 25 points in the price. Despite weaker sales numbers last quarter, the earnings grew by some 35%. Sales typically improve during the summer months and earnings will continue to grow because of the widening spread between crude oil and gasoline prices. As refined gasoline continues to push upward, crude prices have steadied throughout much of the year aiding in the maximization of refiners profits.

Marathon Oil (MRO) - This is the best diversified energy play because Marathon is actively engaged in exploration and drilling, refining and distribution. If you want to hold one stock with the least exposure to market fluctuations, this is your stock. Reasonably valued with lots of stock growth left, it trades at just under 11x earnings while possessing solid debt ratios.

Other stocks to consider are Petroleo Brasileiro (PBR), the largest Brazilian energy company which possesses good valuation and growth potential, and Transocean (RIG), another major driller and oil exploration with outstanding valuation, a healthy balance sheet, and impressive revenue and earnings growth.