Oil stocks in the United States have been on a tear lately.
On Tuesday, the S&P 500 index of major U.S. oil companies soared more than 9 percent as the price of Brent crude rose sharply.
But the price was up just 1.2 percent for the month, as prices for other commodities like oil-based products and metals rallied.
“It’s a very important time for oil stocks,” said Mark Mathers, president of Oil and Gas Research.
“A lot of the fundamentals for the oil market are looking very good.”
The rally is coming amid the threat of a sharp drop in crude prices, which is already hurting the economy.
Last week, U.N. officials warned the oil price would likely reach $40 per barrel next year, hitting a peak of more than $110.
But Brent crude, which was down about 7 percent last month, is now down more than 30 percent.
The recent rise in oil prices has also helped push up the value of stocks in oil and gas companies.
A majority of the companies that traded at a gain in August were still trading at their current prices in September.
But that’s only partly because the companies are being forced to raise prices or lay off staff.
“The big question is, ‘How much is too much?'” said Michael McArdle, chief investment officer at The Citadel Group.
“And the answer is a lot.”
McArdles said investors should buy the stocks they see rising.
“If they see a market correction, then that’s great,” he said.
But Matherss said it’s also important to be cautious.
“Oil is not a stock you want to be in a position to own unless you’re actively trading,” he added.
The oil market is also showing signs of being volatile, which has made stocks more expensive.
Last month, the benchmark S&s Dow Jones Industrial Average closed at a record high, but the price dropped more than 5 percent for every day between October 1 and October 28.
It has since bounced back and is up nearly 9 percent for September.
“We’re seeing a lot of volatility in the oil and natural gas market,” McArds said.
“It’s just going to take time to really see a clear pattern.”
While stocks have been surging, the U.K. oil and steel market has also been struggling.
In the third quarter of 2018, the pound fell nearly 6 percent against the dollar, the biggest one-day fall since the 2008-2009 global financial crisis.
The pound has also fallen more than 3 percent in the past two weeks.
McArds expects the pound will likely fall another 5 percent or more in the third quarters of 2019 and 2020.
“This is a good time to buy oil stocks because the U and euro are still strong,” he noted.
“I expect sterling to weaken in the coming months.”
But he said investors are still better off if they are hedging their positions.
“You can always get in and out of it,” he warned.
Mathers recommends holding the following stocks in your portfolio.
“They are the ones that will have a lot going for them in the next few years,” he told CBS News.
“Some are very good.
Some are good.
And some are not so good.”
To get a better idea of how stocks are doing, visit our Stock Market page.