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Quarter-End Insights

Where to Shop in the Energy Sector

U.S. tight oil production continues to set the pace for the industry, but the companies most levered to it are either fully valued or overvalued.

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  • We continue to see stocks most levered to U.S. tight oil as fully valued or overvalued, but find pockets of value in gas plays and companies still transitioning to liquids.
  • Capital-spending discipline has come home to roost for the Majors, all of which see to boost returns through lower spending.
  • The cold winter was good for U.S. gas prices, but uncertainty on near-term demand and still-growing production from the Marcellus are likely to keep a lid on prices.

 

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Jason Stevens does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.