The energy transition is creating opportunities in both traditional oil & gas and renewable energy. Here's where the smart money is going.

The energy sector is in the middle of a massive transformation. We're moving from fossil fuels to renewables, but this transition will take decades, not years. That creates opportunities in both the old and new energy worlds.

Traditional oil and gas companies have been generating incredible cash flows. With oil prices elevated and many companies maintaining capital discipline (not over-investing in new production), free cash flow generation has been strong. Many are returning cash to shareholders through dividends and buybacks.

The key insight here is that demand for oil isn't going away anytime soon. Even as electric vehicles gain market share, global energy demand continues to grow. Emerging markets are industrializing, and that requires energy. The transition will be gradual, not abrupt.

On the renewable side, solar and wind are now cost-competitive with fossil fuels in many markets. That's a game-changer. But the stocks have been volatile - they trade more like growth stocks than utilities, which makes sense given the growth rates but can be jarring for investors expecting steady returns.

Nuclear energy is getting a second look. New small modular reactor designs could make nuclear safer and more economical. Companies working in this space are early-stage, but it's worth watching.

Energy infrastructure is another angle. Whether it's pipelines for natural gas, transmission lines for renewable electricity, or storage facilities for both, infrastructure companies benefit from the transition regardless of which energy source wins.

My take: Don't abandon traditional energy yet, but don't ignore renewables either. A balanced energy portfolio might include some oil majors with strong balance sheets and dividend yields, plus exposure to renewable energy growth through diversified ETFs or select individual companies. The key is not betting everything on one outcome - the transition will be messy and take longer than either side expects.

Watch geopolitical factors too. Energy security concerns are driving countries to diversify their energy sources, which benefits both traditional and renewable energy companies. The current environment favors domestic production and diversified supply chains.