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Traders crowd the floor of the New York Stock Exchange.MIKE SEGAR/Reuters

Beaten-up stocks aren't for everyone. They can get more beaten up, for one thing. Worse, when you lose money, you're not only poorer but you feel silly as well.

Yes, this is leading to a discussion about energy stocks – among the most despised and feared sectors, now that the price of crude oil has slumped to four-year lows, OPEC isn't doing anything about it and observers are talking about the start of a difficult era for oil producers.

With the S&P 500 touching record highs earlier this week, why stick your neck out for a few troubled misfits?

The reason to feel bullish about energy stocks comes down to sentiment and perspective – and the fact that the sector offers a range of investing options to satisfy most risk appetites.

Sentiment is severely depressed, implying that there should be some value in the sector; and perspective is focused on the short-term. Take a longer-term approach, though, and these selloffs can look like opportunities.

Tony Starkey, an energy analyst at Bentek Energy, said that the pessimism weighing on the energy sector today is just as severe as it was during the financial crisis in 2008.

Yet, he also pointed out that, unless the world comes up with a replacement for fossil fuels, the sector is unlikely to wither over the longer term.

Porter Bennett, president and chief executive of Ponderosa Advisors, an energy and agriculture research firm (and also the founder and former chief executive of Bentek), believes that the biggest issue driving oil prices is the state of the global economy: Slow growth has created a glut.

"But if the Chinese economy ramps up," he said, "we'll have a hard time producing enough oil to meet demand."

Okay, so no one is calling a bottom here. But if you're tempted to bet that things can't get much worse for the energy sector, you have a lot of options.

So far, I've taken the basket approach with an exchange-traded fund – the iShares S&P/TSX capped energy index ETF. This gives me exposure to 69 Canadian stocks, covering everything from explorers to producers to pipelines, and reduces the pain if a few companies implode.

It yields an impressive 3.6 per cent, although dividends could come under pressure if profits tank.

Individual Canadian and U.S. behemoths are also beckoning. Companies such as Exxon Mobil Corp., Chevron Corp., Suncor Energy Inc. and Canadian Natural Resources Ltd. are big enough to weather any downturn and could even benefit by snapping up smaller companies on the cheap.

Exxon's dividend policy says it all: It has raised its dividend every year for the past 32 years – even when oil traded below $20 (U.S.) a barrel throughout much of the 1990s – by an average of 6.4 per cent. Yet, the shares have fallen 13 per cent since July.

Its blue-chip peers have fallen even harder: Chevron, Suncor and Canadian Natural Resources are down about 20 per cent each, offering a solid long-term investment regardless of what happens to the price of oil in the near-term.

The other end of the risk scale is dominated by the oil services industry – the drillers, which find that work dries up when their oil-producing clients get skittish about developing new fields.

These companies are hurting. Transocean Ltd., which wrote down the value of its fleet by nearly $3-billion, has seen its shares tumble 54 per cent since July. Seadrill Ltd. suspended its dividend, driving the share price down nearly 30 per cent in a single week.

Yet, some observers believe the bad news has been factored into share prices already. A Goldman Sachs analyst upgraded his recommendation on Seadrill to "neutral" from "sell," arguing that the company is trading close to the replacement cost of its assets and that the dividend suspension bolsters its balance sheet.

That doesn't make the stock a table-pounding buy, but it does support the view that the worst of this selloff is behind us.

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