In this video, Motley Fool energy analyst Taylor Muckerman highlights a major issue for any investor following energy stocks: the idea that derivative trading, and hedging strategies to offset the volatility of the commodities these companies trade in, can really skew their year-over-year results, despite having deceptively high growth and revenues. Muckerman takes us through some key examples of what can happen when investors don't take these important skewing factors into consideration.

Though complex, the energy sector is a very exciting, and very lucrative, place to play. If you're on the lookout for some currently intriguing energy plays, check out The Motley Fool's "3 Stocks for $100 Oil." You can get free access to this special report by clicking here.


The article Derivatives Affecting Year-Over-Year Results originally appeared on Fool.com.

Joel South has no positions in the stocks mentioned above. Taylor Muckerman has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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