"In any industry, one of the most sure-footed means of keeping profits steady is to own the suppliers of production means -- the old 'invest in the picks and shovels' approach," explains Neil George in Personal Finance.

He says, "For refiners, it means pipe, compressors, and the other bits used to crack crude into further profitable products." Here, he looks at a trio of favorites: Dresser-Rand Group Inc. (NYSE: DRC), Shaw Group Inc. (NYSE: SGR), and Tenaris (NYSE: TS).

"Dresser Rand is a leading global producer of highly specialized compressors and turbines, nearly 95% of which are used in the energy business. Compressors are used extensively in refineries; they're a crucial part of equipment used to process heavy and sour crude oils. The reactions used to process these more-complex crudes require generating extreme pressure and temperature.

"Dresser's products are also used to process Canadian oil sands. Dresser is also involved in some high-tech deepwater equipment work. The company has designed a subsea compressor and separator for Norway's Statoil.

"This equipment literally sits on the seafloor; the compressor helps to separate gas from oil and transport these commodities by subsea pipeline to distant floating production platforms.

What are the best energy investments for long-term investors? To answer this question, I surveyed 20 of the nation's leading financial newsletter advisors to find their current favorite ideas in the energy sector.

Interestingly, the advisors see the best opportunities in areas well beyond traditional oil firms; indeed, no one included in this report chose a major integrated oil company. Rather, the advisors have shown a preference for various oil services sectors, non-oil energy sources, and developing alternative technologies.

Some focus on areas such as deep-sea operations with Diamond Offshore Drilling Inc. (NYSE: DO), Transocean Inc. (NYSE: RIG) and Oceaneering International (NYSE: OII), while others look toward oil shippers such as Nordic American Tanker Shipping (NYSE: NAT) and refiners such as Valero Energy Corp. (NYSE: VLO).

Others chose companies that make specific products needed by the oil & gas industries such as NATCO Group Inc. (NYSE: NTG), which makes a wide range of oil & gas processing systems; Dresser-Rand Group Inc. (NYSE: DRC), a maker of control systems; Gardner Denver Inc. (NYSE: GDI), which makes compressor and fluid transfer systems; Tenaris (NYSE: TS), a maker of pipes and tublar products and Schlumberger Ltd. (NYSE: SLB), the largest and most diversified of the oil services companies.

MAJOR PAPERS:

• Madonna, the original material girl, is signing a 10-year $120M deal with concert promoter Live Nation (NYSE: LYV), leaving Warner Music Group (NYSE: WMG) in her wake, reported the Wall Street Journal.
• According to the Wall Street Journal's "Heard on the Street" column, Progressive Corporation (NYSE: PGR) is struggling due to competitors' pricing, safer cars, and a struggling economy, to name a few factors.
• The Financial Times reported that General Electric Company (NYSE: GE) will decide whether to sell its 80% stake in NBC Universal after the Beijing Olympics in August 2008, according to sources.
• Tenaris (NYSE: TS), the maker of steel pipes for oil and gas exploration, has ruled out any possible sale of itself to ArcelorMittal (NYSE: MT) , the world's biggest steel producer, reported the Financial Times.

OTHER PAPERS:

• The New York Post reported that UBS AG (NYSE: UBS) has fired David Martin, its head of interest-rate trading, and James Stehli, the head of its collateralized debt obligation unit, due to the fallout from the mortgage meltdown.
• BP PLC (NYSE: BP) CEO Tony Hayward will today unveil plans to reduce bureaucracy and duplication of management at the oil giant, reported the Telegraph.

MOST NOTEWORTHY: Suntech Power (STP), MetroPCS (PCS), Micron Tech (MU) and Charles River Labs (CRL) were today's noteworthy initiations:

• JP Morgan initiated shares of Suntech Power Holdings (NYSE: STP) with a Neutral rating, citing valuation. The firm prefers the stock to peers given the company's larger scale, solid supplier relationships and exposure to new technologies.
  
• JP Morgan also started shares of MetroPCS Communications (NYSE: PCS) with a Neutral rating, as it likes the company's model, but sees greater upside in peers like Clearwire Corporation (NASDAQ: CLWR), Sprint Nextel Corporation (NYSE: S), Leap Wireless (NASDAQ: LEAP) and Rogers Communications (NYSE: RCI).
  
• William Blair believes Charles River Labs (NYSE: CRL) is the best pure-play investment in preclinical development given its dominant franchise in animal disease models, and started shares with an Outperform rating.

OTHER INITIATIONS:

• Gabelli initiated shares of Tenaris SA (NYSE: TS) with a Buy rating and $68 target.
  
• RBC Capital started shares of Time Warner Cable (NYSE: TWC) with a Sector Perform rating and $39 target.
  
• CDC Corporation (NASDAQ: CHINA) was started at ThinkEquity with a Buy rating and $11 target.
  
• Suntrust started shares of Owens Corning (NYSE: OC) with a Neutral rating.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Hydril Corp (HYDL), Circuit City Stores (CC) and Ford Motor Corp (F) topped today's list of most notable downgrades:

• Following the acquisition by Tenaris SA ADS (NYSE: TS), Hydril Corp (HASDAQ: HYDL) was downgraded by Lehman Brothers to Underweight from Overweight, to Peer Perform from Outperform at Bear Stearns and to Neutral from Overweight at JP Morgan.

• Circuit City Stores (NYSE: CC) was downgraded to Neutral from Buy on valuation at Goldman Sachs.

• Merrill Lynch downgraded Ford Motor Corp (NYSE: F) to Sell from Neutral citing the recent strength of its shares.

OTHER DOWNGRADES:

• Alcoa Inc (NYSE: AA) was taken down to Hold from Buy on valuation.

• Multi-Fineline Electronix Inc (NASDAQ: MFLX) was downgraded to Strong Sell from Strong Buy at Matrix USA, as the firm believes strong competition is eroding sales growth.

• Hansen Natural Corp (NASDAQ: HANS) was downgraded by both Goldman Sachs and JP Morgan to Neutral from Buy on valuation.

• Citigroup cut Coca-Cola Enterprises Inc (NYSE: CCE) to Hold from Buy citing the difficult CSD environment, especially relative to Buy-rated Pepsi Bottling Group (NYSE: PBG). The firm considers Pepsi Bottling to be better-positioned than Coca-Cola Enterprises.

• Freidman Billings downgraded Onyx Pharmaceuticals (NASDAQ: ONXX) to Underperform from Market Perform on valuation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

U.S. markets closed higher Wednesday, as 10-year interest rates rose on a stronger-than-expected November 2006 retail sales report. The Dow rose 0.05%, NASDAQ 100 rose 0.05%, S&P 500 climbed 0.15%, and the 10-year bond rates rose to 4.577%. The CBOE VIX was down -0.34 to 10.30.

Harrah's Option Volume Heavy On Fears HET's Board Is Discussing Bids

Harrah's (NYSE:HET) closed down $1.66 to $78.50. The Wall Street Journal reported on Monday, 12/11/06: "HET plans to meet Wednesday to consider all buyout offers." HET's option implied volatility rose Wednesday on fears the bidding information flows might be flawed, concerns about the rumored price, the type of currency, and the possibility of no deal. HET call option volume of 51,041 contracts compares to put volume of 25,276 contracts, according to Track Data.