The Financial Post takes a weekly look at the tools and strategies that will help make your investment decisions. This week: the winners in a low-priced energy environment.

Recent earnings for oil companies show just what a punishing environment the market has become for them this year.

Oil producers and explorers have warned during recent guidance that the particularly steep plunge in oil prices in October will hurt profits, which has hammered their stocks even though many reported strong earnings for the third quarter. The S&P/TSX Capped Energy Index is down 19.8% since its most recent high in early September.

Since one-third of Canada’s stock market is made up of energy companies, the plunge in oil is naturally considered a negative for Canadian stocks. But for those who want short-term plays, a number of companies are currently benefiting.

“It’s a great time to be a transportation company — airlines, railroads, shipping,” said Barry Schwartz, chief investment officer and portfolio manager at Baskin Wealth Management in Toronto. “I expect you’ll see that reflected in earnings, at least in the near term.”

Some companies are already talking about the boost in business they expect from lower prices. WestJet Airlines Ltd. chief executive Gregg Saretsky said in a call earlier this month that lower fuel prices will allow the airline to reduce fares without hurting margins, potentially luring more passengers on their flights.

Airlines certainly will be among the biggest winners, since their biggest costs tend to be jet fuel. But lower oil prices are also a boon for railroad and shipping companies, many of which charge a fuel tax to protect themselves from high oil prices.

“Companies like TransForce, CP, CN and even Algoma Central that pass on the cost inflation of rising oil prices, but don’t necessarily pass back when things moderate, will see a nice boost from this,” Mr. Schwartz said.

Lower oil prices should also help Canadas retailers. Norman Levine, managing director of Portfolio Management Corp. in Toronto, said consumers should have more money to spend this quarter as the crucial holiday shopping season approaches.

“This is like a tax cut for consumers. Watch economic activity this Christmas season benefit as consumers have more money in their pockets to spend,” he said.

Most energy industry watchers think oil prices will continue to head lower or stay where they are now. Goldman Sachs predicts oil prices will fall to US$70 a barrel next year, while famous investor Dennis Gartman has said crude could go the way of whale oil in the next decade.

But Mr. Schwartz said investors should be aware that any play on lower oil prices shouldnt be seen as a long-term investment, given that oil prices can have volatile swings upward or downward.

Mr. Levine said the team at Portfolio Management are staying on the sidelines despite the decline in equity prices and oil prices, saying North American equities continue to look expensive given the economic climate.

“We have cash to spend at the right price,” he said. “We see declining stock prices and declining oil prices. This combination means that sometime in the near future we will have the right mix come together to allow us to increase our equity weightings.