<<<You sound pretty negative.>>>
I am bearish on energy stocks right now, at least as far as oil and gas are concerned. I do follow the sector, and there just plain isn't anything I can see to justify current prices anytime in the next year. Demand is down, prices are down, exploration is down, production is down, capital spending is down, the only thing that isn't down is supply levels and unemployment. The stocks are very volatile right now, which makes for increased day trading activity, but day traders tend to burn out a stock fairly quickly. As you mentioned in a previous post, these stocks are cyclical. Trailing PEs are meaningless coming off a market top. There also tends to be a delayed reaction coming off a market top in revenue and earnings as companies will usually hedge prices when conditions are good. It normally takes a good 6-9 months for the full impact of lower commodity prices to hit revenue and earnings. The same applies to oil services as they tend to build large backlogs of business during a good run up in prices. IMO, the bottom of the cycle is still a long ways off. The only wild card in the deck is OPEC and their track record as oil's white knight is not exactly impressive.
FWIW, my current positions in O&G are put options. So "pretty negative" is an accurate description. |
