Deals Flower in the Oil Patch

It's been a sure-fire investment strategy ever since the giant bull market in energy stocks started in 2003: Buy shares on any major pullback and ride them higher. But a lot of new negative analysis has dragged these stocks much lower in recent weeks, with some issues down 20% to 30% from their recent highs. Is buy-the-dip still a winning formula? Probably so.

Sure, there are plenty of reasons to wring your hands. Sky-high crude prices have taken a bite out of worldwide demand growth. The industry's push to bring on new capacity is starting to work, producing more raw materials and products. Inventories are high, which can drive prices down suddenly—just look at the plunge in natural gas prices. The industry is facing cost pressure for everything from drilling rigs to engineers. Plus, the Federal Reserve may overshoot with its the interest-rate hikes and throw the U.S. economy into a downturn, which would curtail buying in the No. 1 consuming country.