The Most Unloved Sector in the Stock Market…And Why You Should Buy It
Old Energy has been making news for the wrong reasons, but valuations are attractive here.
The COVID economy we suffered through in 2020 was difficult for many industries. While airlines, retailers and casual dining got a lot of the headlines, the energy sector suffered right along with them. After trading as high as the mid $70 per barrel range in 2019, West Texas Intermediate (WTI) Oil briefly dropped below $0 during the COVID selloff last year!
But really, investors had left the sector prior to COVID. The energy sector reached an ignominious milestone in November 2019, when Apple Computer (AAPL) surged ahead of the entire sector in market cap. Increasing political headwinds and the inevitable advance of green energy technologies were seen by many as the primary harbingers of the end times for fossil fuel production.
Eric Nuttall, of Financial Post (financialpost.com) argues that this is not the case. In a recent article he states:
“the runway for alternatives to displace oil is several decades long implying at least a decade of further growth in global demand. This macro setting, combined with enormously compelling valuations with oil stocks trading at less than half of historical…
