Energy Remains the Most Undervalued Sector
We expect a nearly complete recovery in crude demand as the pandemic subsides in 2021.
Quarter-End Insights
Mentioned: Enterprise Products Partners LP (EPD)
, Pioneer Natural Resources Co (PXD)
, Schlumberger Ltd (SLB)
Following positive coronavirus vaccine trial reports and regulatory approvals in the fourth quarter, the Morningstar US Energy Index rose an impressive 29% in the fourth quarter, outpacing the overall market. Year to date, the outsize impact of the pandemic on crude-oil demand and prices has contributed to a 33% fall in the index versus a 19% return for the market. As initial inoculations continue to be carried out, renewed confidence in a pickup of global crude consumption in 2021 will be a major driver of performance in the first quarter. Energy remains the most undervalued sector, trading at a 22% discount compared with a 6% premium for the overall market.
Stocks are still trailing the broader market, despite the rally - Morningstar
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Dave Meats does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.