The Fuel Of Hope

11/28/2016


Since the presidential election, the energy sector has roughly matched the market. Don't let that lack of action fool you; there's a lot going on with energy. Here are three points every investor should consider:

• Heading into the election, the energy sector was the second-best performer after utilities. Now it's tops among sectors, up more than 18%, nearly doubling the broad index's return. Unfortunately, hype has outpaced fundamentals. Energy stocks average lower Quadrix Overall, Momentum, Value, and Quality scores than any other
sector.

• Oil prices have risen this year, with North Sea Brent crude up 34% to $49 per barrel, as emerging-market demand continues to rise. The U.S. Energy Information Agency expects Brent crude to average $48 per barrel in the December quarter and $51 next year.

• President-elect Trump's energy policy revolves around making America energy independent by tapping into coal, oil, and natural-gas reserves. That sounds like good news for companies that produce, refine, or transport energy in the U.S.. Shares of these stocks, including Buy-rated EQT Midstream Partners ($74; EQM), have rallied since the election.


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