Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: CommanderCricket who wrote (187812)	1/7/2015 9:49:49 AM
From: kidl	Respond to of 206084

Goldman and Morgan say buy energy stocks 5 hours ago ft.com Despite ranking as the worst performing sector of the year (so far), two of Wall Street's most prominent investment banks are sticking their necks out for energy. Goldman Sachs and Morgan Stanley reiterated calls this week for investors to be overweight energy stocks in their portfolios, as US crude oil hovers below $50 — a 56 per cent slide from a June high. The slump in oil prices has depressed energy stocks — they are down 24 per cent from last June — and rattled the wider US equity market. But that drop has made the energy sector's valuation more "attractive", Goldman says, with the industry's price-to-book ratio of 1.8x below the S&P 500's 2.8x ratio, and its equity value-to-earnings is nearly two fifths below the wider index's. The 50 per cent plunge in Brent oil price since June is a gale force headwind for near-term Energy equity returns. However, our sector allocation model suggests attractive current valuation and capital return to shareholders will support Energy sector outperformance during the next 12 months. Strategists with Morgan Stanley add that energy stocks tend to bottom before earnings revisions do — indicating the stocks could stabilise or head higher even as analysts continue to cut forecasts. They note: We think that the stocks are cyclical,and every time they have been down this much they have subsequently outperformed the S&P 500 six months later. Secondly, the stocks typically bottom before the earnings revisions bottom, on average by two months, and as numbers have been slashed and likely will be further cut during the coming earnings season, we know we have to be anticipatory. But there is a bit of caution, with Morgan Stanley saying "we worry we are early". Some reason for that trepidation: energy stocks have fallen nearly 5 per cent in 2015 thus far.