The U.S. economy is improving and that's going to translate into more demand for dependable sources of energy. More importantly for publicly traded North American producers, service companies and investors, it also means that higher energy-sector share prices are ahead. This is the market analysis offered by Peter Quick, president of the American Stock Exchange, New York. "In the second quarter of 2003 alone, we saw better than a 10% appreciation in the stock prices of 80% of Amex-listed energy stocks from the like prior-year period," says Quick. Indeed, the shares of Devon Energy-the biggest Amex-traded energy stock-were up 11% during that year-to-year period. Meanwhile, commodity prices for the exchange's oil and gas companies rose an average 18%. "Energy was one of the strongest sectors of the economy last year, and it's likely to remain that way this year and next," he contends. "Not only is the U.S. economy improving, which is going to create added demand for energy, but there are a lot of oil-producing hot spots around the world-Nigeria, Venezuela and Iran-that might be trending just a little bit unstable or questionable, in terms of supply. Also, it's hard to say just when Iraq will again become a dependable source of oil." That puts more focus on North American sources of energy-the U.S., Canada and friendly countries in the Caribbean, says Quick. "This bodes well for producers operating in these areas. Some of them, in their presentations at The Oil and Gas Conference recently held in Denver, said they could be profitable with $3 gas. "If natural gas prices stay in the $4 to $5 range-and they're likely to, given all the forecasts of a cold winter ahead-that would make those producers even more profitable and their stocks that much more attractive to investors." The Amex president believes the market downdraft of the past two years has dragged down energy-sector stocks to the point where many are now real value plays. He observes that several prominent operators like Burlington Resources have indicated their intention to buy back stock, at relatively depressed levels, or buy reserves from other producers at what is effectively 50 cents on the dollar-to be able to capitalize on market opportunities later. Any value plays among Amex-listed energy companies? Quick isn't an oil and gas analyst, but he does point out that Amex-listed Contango Oil & Gas, Canadian Superior Energy, Teton Petroleum and Superior Energy Services are all emerging companies with considerable growth potential-and that some of the exchange's larger listed energy players like Devon Energy, land-drilling giant Nabors Industries and Canada's Imperial Oil were all at one point smaller growth entities themselves. Stresses the Amex head, "If you go back to the roots of our exchange, when trading was done on the curb of Broad Street, a block south of the New York Stock Exchange, providing a venue for very entrepreneurial companies to access the capital markets is what we've always been about-and that will continue." Providing such a trading forum-and a wide range of services to help smaller-cap companies-has paid off for both the exchange and investors in its listed companies. From January 2000 through June 2003, the Amex Composite Index rose 10.5% in value. Meanwhile, other comparable indices fell, with the NYSE Composite Index off 19.9%; the Nasdaq, 60%; the S&P 500, 33%; the Wilshire 5000, 32%; and the Russell 2000, 11%. Although sanguine about the outlook for the energy sector, he cautions that there's a delicate balance to be struck. "Energy prices may be headed up, but if they rise too steeply, that will slow down the entire economy." That caveat aside, Quick says this year, he has seen a lot more investment-management people attending energy conferences like the one in Denver. "They're coming in greater numbers because they see light at the end of the tunnel with respect to the economy, and hence opportunities to invest in one of the major sectors that will benefit from that."