Oil companies are the elephant in the room.

The wide trading range and erratic movement of oil prices has been perplexing to pundits, investors, and motorists alike. Prices go down, they go up, and they go nowhere.

You're not hearing bold prognostications or definitive explanations about either oil prices or oil-company stocks. Better to simply wait quietly for everything to play out, most rational people reason. When that will occur, however, no one knows for sure.

China's oil consumption appears to be recovering, Americans are gassing up their cars more often, oil inventories are being reduced, and the release of economic data on any given day impacts the markets.

Yet, everyone is couching their bets—if they bet at all—because they've been burned too many times before.

"I think the price of oil in a year is going to be higher than its recent range of around $70 a barrel," says Tim Parker, energy analyst with T. Rowe Price, in Baltimore. "But it won't be at $200 a barrel because demand would then drop to nothing, and it won't be at $20 because no one would be able to make money at that price."

In this environment, investors have seen oil stocks decline even as most other energy stocks have risen significantly.

Not that behemoth oil companies receive much sympathy from anyone other than their own investors.

Potential investors, on the belief that eventually oil prices always rise, are wondering whether the time is right to buy oil stocks at their current prices.

"As soon as oil bottoms, it starts to rise, and the best performers are always the exploration and production companies and the oil services companies," Parker says. "The major oil companies lag, but as the cycle continues they benefit and claw their way back."

While a weak economy won't last forever, it continues to take a toll.

"The demand for fuels really dropped due to the downturn in the economy, with people not driving and also a lack of industrial demand," says Tina Vital, oil equity analyst with Standard & Poor's, in New York. "So it really shouldn't be surprising that both the earnings and the share price of the refiners are down."

In this environment, "cash is king," notes Vital, so look for companies with strong balance sheets to ensure they can weather the storm and take advantage of market opportunities. They should have a mix of oil and gas operations with contracts 20 to 30 years long, providing greater earnings stability and a dividend as well.

The super-major oil companies best fill that bill, with Parker and Vital recommending the following:

•ExxonMobil Corp. (XOM), the industry leader in sales and market capitalization, is a proven leader in efficiency, technology, and development as well.

•ConocoPhillips (COP), whose past acquisitions are expected to boost reserves and increase production, should benefit in the long run from a higher proportion of natural gas than its rivals.

•Chevron Corp. (CVX), which was able to increase its production amid falling oil prices, has impressive exploration programs and also a significant number of Asian refineries.

"The stock prices of these companies have lagged, but as the economy recovers and demand heats up, they will be good stocks again," Parker says.

Petroleo Brasileiro S.A. (PBR), controlled by the Brazilian government, is a stock recommended by Parker. Its recent oil and gas discoveries could triple its resource base, and it is experienced in deep-water offshore operations.

Moving down a notch in size but with good growth in oil reserves and solid future expectations are companies such as Murphy Oil Corp. (MUR) and Occidental Petroleum Corp. (OXY), both of which are recommended by Parker and Vital.

"Everyone should have exposure to energy, but the question is whether it should be more or less exposure than energy represents in the overall market, which is about 11 percent of the S&P 1500," says Derek Rollingson, portfolio manager of the ICON Energy Fund, in Greenwood Village, Colo.

"The fact is that, unlike deciding whether to shop in a department store or not, people will have to pay for heating their homes or running their vehicles," Rollingson says.

His ICON Energy Fund (ICENX), up 8 percent this year following last year's 20 percent drop, has a five-year annualized return of 12 percent. Rollingson is banking on the inevitability of worldwide growth increasing consumption and driving oil prices and oil stocks upward.

"India has its new Nano car from manufacturer Tata, and whenever significant numbers of people move from a bicycle to a motorcycle or a car, they're going to consume more energy," says Rollingson.

"As developing markets become more developed, they use more energy," he says

He is adding to his fund's shares of PetroChina Co. Ltd. (PTR), that nation's largest producer of oil and gas, which is controlled by the Chinese government. With China accounting for a large part of global energy demand going forward, that company will continue to grow.

Rollingson's favorites among the oil and gas drillers are Atwood Oceanics Inc. (ATW) and Diamond Offshore Drilling Inc. (DO) because of their stock prices and positioning in the industry. Meanwhile, Parker's favorites in oil services are Schlumberger Ltd. (SLB), Halliburton Co. (HAL), and Baker Hughes Inc. (BHI).