Montreal, Canada

According to a recent report from PFC Energy, the world's top five super-majors are holding about $75 billion dollars in cash. Cash-flow is a prize in the oil business because it allows companies to explore and make strategic acquisitions. And nobody has more cash than Exxon-Mobil – the world's largest oil company based on stock market capitalization.

In December, Exxon-Mobil (NYSE-XOM) went into action and acquired XTO Energy (NYSE-XTO) for $41 billion dollars. Exxon has more net operating cash than many small governments around the world. Though not a bad deal for XTO Energy shareholders, Exxon has struggled over the last few years; the stock price declined about 12% last year even as oil prices rocketed 78%. Maybe Exxon is just too big. It's the same story with Chevron (NYSE-CVX) – another laggard last year.

I continue to like Big Oil long-term but prefer the European and Russian majors because of better strategic alternatives for new finds, fatter dividends and, over time, a much stronger performing share price. I also like Canada's Encana (NYSE-ECA), which recently spun-off its Canadian oil sands division into Cenovus Energy (NYSE-CVE).

My Commodity Trend Alert (CTA) investment service, now in its eighth year, remains long and strong two major European oil companies since 2002. Including dividends, these stocks have rallied a cumulative 211% and 152%, respectively.

About two years ago, we also purchased Russia's cheapest-priced oil company at a massive 80% discount to Exxon-Mobil based on relative stock market capitalization.

Cash is a value play in any market. Value investors love free cash-flow and prefer cash to other accounting gimmicks on a balance sheet, which tend to be distorted by fudged accounting rules.

Going forward, Big Oil will have to spend more money to replace dwindling oil production. The majority of companies and countries are struggling to replace their annual production vis-à-vis new finds. In Brazil, the offshore shales look promising and are probably the biggest oil discovery in more than 30 years; the problem is that it will cost a fortune for Brazil to extract deep-seated oil. It'll also be years before the market sees any production.

The big money has already been made in the oil business. The last eight years have been superb for the world's largest oil companies as crude has skyrocketed from under $10 a barrel at its low in late 1998 to $78 now.

The next source of big profits in the energy complex probably lies in the alternative energy space, which remains in a draw-down since peaking in late 2007. After growing into a "bubble" from mid-2005 until 2007, this sector remains about 50% from its all-time high after tanking in the 2008 global market meltdown.

Many of these small companies remain unviable economically but some will emerge as world-class leaders in the wind, solar, geothermal, algae and switch-grass sectors. The United States, India and China are increasingly committing big sums of government cash and subsidies to this sector yet the price action remains uninspiring even as global stocks have surged over the last 10 months.

Denmark's Vestas Wind Systems (Copenhagen-VWS) has already emerged as a world leader and others will follow as populations, industry and government increasingly grow frustrated with high oil prices and the resultant damage done to the environment.

The best time to buy an asset is when everyone has already sold it and holds a universally bearish view of the future. That's the case now with alternative energy, especially following the failure of the December UN Climate Change Conference in Copenhagen.