Dresser-Rand (DRC - option chain) shares are rising today after the company announced it has agreed to acquire diesel and gas engine supplier Grupo Guascor SL in a $690 million cash-and-stock deal. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on DRC.

"The oil services and equipment industries have been a hotbed of M&A activity over the past few years, a trend that should continue into 2011," says energy sector specialist Elliott Gue.

The editor of The Energy Strategist explains, Three of my top 10 takeover plays hail from this part of the energy patch: Core Laboratories (CLB), Dresser-Rand (DRC) and Dril-Quip (DRQ).

"With a market capitalization of more than $100 billion, Schlumberger (SLB) should add to the dozens of acquisitions it's closed over the past few years.

Analyst Upgrades

• RightNow (RNOW) to overweight from neutral at Piper Jaffray.
• Vivo Participacoes (VIV) to overweight from equal weight at Barclays.
• Genesis Energy (GEL) to outperform from sector perform at RBC Capital.

Analyst Downgrades

• First Community (FCBC) and WesBanco (WSBC) to hold from buy at Stifel Nicolaus.
• Dresser Rand (DRC) to neutral from buy at Global Hunter.

Analyst Upgrades

• Goldman upgraded CSX (CSX) to neutral from sell.
• General Cable (BGC) was upgraded to buy from hold at KeyBanc.
• Morgan Stanley upgraded Chart Industries (GTLS) and Dresser Rand (DRC) to overweight from equal weight.
• Blackrock (BLK) was upgraded to outperform from neutral at Macquarie.
• Credit Suisse upgraded Zions Bancorp (ZION) to neutral from underperform and GameStop (GME) to outperform from neutral.
• Honeywell (HON) was upgraded to outperform from sector perform at RBC Capital.
• Panera Bread (PNRA) was upgraded to buy from neutral at SunTrust.

"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.