Energy profits are booming and Big Oil shares look inexpensive. But investors with an appetite for risk might want to drill deeper into the sector to find smaller companies sitting on U.S. oil-shale riches—which make tempting takeover targets, analysts say.
Large oil companies are riding a 25% fourth-quarter surge in Nymex crude prices. Analysts estimate that energy companies in the Standard & Poor's 500-stock index saw earnings growth of 34% in the fourth quarter—more than twice that of any other sector, according to S&P.
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