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Sections of pipe are stored at a Pacific Rubiales field in eastern Colombia.JOSE MIGUEL GOMEZ

It is easy to think of energy stocks as nothing more than a good way to bet on the price of crude oil. But shrewd investors have long known that selecting the right energy stock is far more important than getting the commodity bet right.



The price of crude oil hit a near-term bottom in mid-December, 2008, when the financial crisis was in full bloom and the global economy looked set for disaster. Since then, as the economic recovery has taken hold, oil has marched up nearly 160 per cent in U.S. dollar terms.



By contrast, the average energy stock has had a tough time keeping up. The S&P/TSX energy index has produced gains of just 47 per cent over the same period, in Canadian dollar terms. Even in U.S. dollar terms, which isn't especially helpful for investors, the index has risen at less than half the pace of crude oil.



But dig a little deeper and you'll find that energy stocks are by no means a homogeneous group of companies that simply rise and fall with energy prices. Some companies have been far more successful at finding and developing their resources, and driving earnings higher.



No, I'm not talking about the household names here. Suncor Energy Inc., Canadian Natural Resources Ltd. and Canadian Oil Sands Ltd. have done well during oil's rebound over the past two years, with average gains of about 60 per cent - and their endless trips to the patent office are no doubt helping them out in the longer term.



But the standouts make those gains look quaint. Here are two terrific examples: Petrominerales Ltd., which has energy operations in Colombia and Peru, has risen 480 per cent over the same period. And Pacific Rubiales Energy Corp., which is focused on Colombia, has soared an astounding 1,340 per cent.



The gains have little to do with innovation. Instead, both companies are a fraction the size of behemoths like Suncor, and that's part of their appeal: They can grow their earnings faster and look far more digestible as takeover targets.



Of course, their triple-digit runups can scare away latecomers, who entertain legitimate fears that the big gains have already been made.



But what's key here is that if you want to bet on an improving global economy and the ongoing importance of crude oil to feed energy-hungry countries like China, then it often pays to look beyond the household names. They often come with more geopolitical and financial risks, but the upside is hard to ignore.

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