Handling energy stocks

NEW YORK – As the rest of the equity market founders this year, energy stocks are surging, propelled by steadily rising crude prices that have climbed along with terror fears and unrest in the world’s oil-producing regions.

Some analysts see the sector’s strong performance as a signal to trim energy holdings and take profits, while others think the oil stock sprint has only just begun. Either way, it’s probably a good idea to maintain some exposure to the best performing sector in the Standard & Poor’s 500. The exchange-traded fund that tracks the 27 energy companies in the index has soared 13 percent so far this year, far outpacing the 4.8 percent rise in utilities, the next best gainer. The index as a whole has sagged 4.3 percent since the start of 2004.

While supplies are tight and global demand is on the rise, few on Wall Street believe current oil prices are justified. The market has added a $10 to $15 “fear premium,” said Dean Junkans, of Wells Fargo Private Client Services.

“With oil prices up 42 percent over the last year, and the energy sector up 40 percent over the last year, we think it’s time to take some profits,” he said.