Major investors have been leaving energy stocks for dead during the year as supply gluts have been causing prices for resources to slump. With the hope of a fast recovery for travelling in 2021 many are looking ahead to try and make gains as energy demand grows worldwide.
An interview with the president of Altfest Personal Wealth Management Lewis Altfest, he stated that investors can likely get “a total return over the next few years, of 50%” by looking at energy stocks. With last week’s movement of the whole market while the energy sector saged even more, the opportunity of a return that hefty could happen even faster than that. On top of that he believes that is the cap for the energy sector by saying that “if I got my 50%, I would give serious consideration to moving on to something else.”
Mr. Altfest mentioned that this isn’t a long term decision and that electric vehicles will cause disruptions in the energy demand chain but that “obviously there will be increased competition coming as well from wind and solar, and they are getting to be more efficient all the time.” His firm oversees around $1.4 billion for clients that remain private and has overseen market ebbs and flows including the October 1987 crash and aftermath as well as the dot com bubble and housing financial collapse.
Other investors have already started getting on the potential upswing for the oil industry as the S&P 500 energy sector jumped 27.5% compared to 2.3% for the entire index last week. Even taking that into consideration the energy sector has been the worst performing group in the index by a large margin, being down over 36%. The next lowest sector was financials at just under 8% down for the year. Meanwhile four industries have double digit gains including materials at 16.5%, communication services at 19.5%, consumer discretionary at 29.8% and being led by information technology at 33.7%.
Mr. Altfest did have advice, and named three companies that would likely be great pick ups in the energy industry. Those were BP PLC, which is currently down 44% this year, Exxon Mobil Corp, which is currently down 42% in 2020, and Chevron Corp which has had a good year comparatively being down only 24%. All three of the big oil, old school groups should have a healthy recovery as travel and discretionary demand grows through 2021.