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Energy

May 07 2019

Commodity Stocks: More Of The Same

  • May 7, 2019

Someone forgot to tell commodity trades this is an era of diversity of inclusivity: This year’s leap in the S&P/Goldman Sachs Commodity Index has been entirely the result of its heavily-weighted energy inputs.

Apr 26 2019

Oil And The Dollar At New Highs: Is Something About To Give?

  • Apr 26, 2019

Crude oil and the U.S. Dollar Index accomplished a relatively rare feat by moving to simultaneous six-month highs earlier this week (Chart 1).

Feb 23 2018

The Commodity Stock Disconnect

  • Feb 23, 2018

While watching a forecast go awry is painful, there’s an alternative that we consider to be even worse: the failure to be paid on an accurate forecast. The resulting feeling of helplessness must be similar to that of a corporate director who manages to lose money on inside information.

Jul 08 2017

Areas To Avoid In The Energy Sector

  • Jul 8, 2017

Anticipating prolonged weakness of energy prices, we advise avoiding two segments within the Energy sector: companies with high balance-sheet risk, and special Energy investment vehicles called Energy Royalty Trusts.

Jul 08 2017

Recent Years’ Oil Price Experience Akin To 1980s’

  • Jul 8, 2017

We revisit commentary we published in 2015 regarding the late-2014 oil price crash and review why, at that time, we believed oil prices could stay at depressed levels for a longer period than most expected. Additionally, we advise avoiding two Energy sector segments: companies with high balance-sheet risk, and Energy Royalty Trusts.

Jul 08 2017

Energy Still Out Of Sync

  • Jul 8, 2017

We wrote a year ago that the Energy sector’s 2014-2016 decline of 47.3% was the worst-ever sector decline occurring outside of a cyclical bear market.

Jun 07 2017

Energy: Too Early To Bottom Fish

  • Jun 7, 2017

The gap between crude oil prices and Energy sector RS is now much wider than seen even at that historic 2014 juncture. The “divergent” weakness in Energy stocks suggests that crude will likely trade lower.

May 05 2017

Another Leg Down In Crude?

  • May 5, 2017

Remember the special amplifiers used by the fictional rock group Spinal Tap that could be dialed up to eleven? S&P’s decision last year to designate Real Estate as a full-fledged sector means that our GS rankings can now be dialed down to eleven, and unfortunately the Energy sector has been a frequent occupant of that undesirable spot.

Mar 10 2017

Using Energy Stocks To Forecast Oil

  • Mar 10, 2017

The latest Green Book highlighted the unusual divergence between crude oil and the relative performance of the S&P 500 Energy sector. Crude prices had—until this week—been trading near 18-month highs, while the relative strength of Energy stocks had slipped back towards January 2016 lows.

Mar 07 2017

What’s Wrong With Energy Stocks?

  • Mar 7, 2017

One of our disappointments with the Group Selection (GS) Scores in 2016 was their failure to latch on to the rebound in Energy groups.

Aug 05 2016

Energy: Waiting For The Green Light

  • Aug 5, 2016

Despite putting in lows in January, the Energy sector has been stuck at the bottom of the GS rankings, and the sector has given up more than half its relative gain over the last several weeks. Perhaps the GS Scores will highlight a better entry point in the months ahead.

Jun 07 2016

Energy Sector: Too Much Risk Taking As Oil Price Bounced

  • Jun 7, 2016

Despite recent bounce among stocks in the Energy sector, the GS Scores still rate Energy groups poorly.

Jun 07 2016

Time For Materials?

  • Jun 7, 2016

The Leuthold Materials sector jumped five spots to #3 in the June Group Selection (GS) rankings, its highest ranking in eight years and the first reading outside of the bottom four in almost four years.

Apr 07 2016

A Turn In Leadership?

  • Apr 7, 2016

Last month we wrote that a big March gain would trigger a Very Long Term (VLT) Momentum BUY signal on the S&P 500 (Chart). The month’s 6.8% S&P 500 gain wasn’t quite enough to do the trick, but we’re intrigued that VLT did issue BUY signals for three of the market’s cyclical sectors, including Energy, Materials, and Industrials.

Mar 07 2016

Muddle-Through Still Has The Benefit Of The Doubt

  • Mar 7, 2016

The market’s latest infatuation with bonds was driven by grave concerns that the weakness in energy and manufacturing sectors might be spreading to the U.S. economy as a whole.

Mar 07 2016

Bottom-Fishing In Energy: Beware Of Bankruptcy Risks

  • Mar 7, 2016

New developments have lifted sentiment toward oil and Energy names, but we caution bottom-fishers to be mindful of risks. The fundamentals in the oil patch do not yet support strong oil prices going forward.

Sep 08 2015

Oil Price “Crashes” In Historical Perspective

  • Sep 8, 2015

In view of the last year’s steep decline in oil prices, Energy has been a frequent headline topic.

Aug 07 2015

The 30/30 Club!

  • Aug 7, 2015

The S&P 500 Energy sector’s latest plunge puts it down by almost a third in the last 14 months. It now belongs to an exclusive list of sectors which have declined 30% on both an absolute basis and relative to the S&P 500!

Feb 06 2015

Cheap Energy—Which Industries Benefit The Most?

  • Feb 6, 2015

It’s more complicated than one would think. Besides input costs, one must consider the impact on revenues, and whether various pricing differentials come into play.

Feb 06 2015

A Few Thoughts (And A Lot Of Charts) On The Oil Collapse

  • Feb 6, 2015

Has the recent collapse in crude oil prices presented us with a good opportunity for an outright commodity investment? No. Energy stocks aren’t on our radar screen either.

Feb 06 2015

Capex, Capacity And The Dollar

  • Feb 6, 2015

We’ve been highlighting the overinvestment (or malinvestment) risks in commodity-oriented equity sectors for the past three years, but we certainly did not foresee those risks exploding the way they have in the oil market over the last seven months.

Feb 06 2015

A Look At The Impact Of Lower Energy Prices On Countries

  • Feb 6, 2015

A big question for investors is: have oil prices bottomed? For the past four days, WTI jumped 19% from its low reached on January 28th, giving some the conviction that prices are reverting back to prior high levels.

Jan 08 2015

Thoughts On Energy

  • Jan 8, 2015

The recent Energy sector decline has accomplished the feat of wiping out all of the upside gains achieved during its “Third Act” played out in the 2006-2008 surge.

Oct 07 2014

The Evolving State Of India’s Energy Sector Price Reform

  • Oct 7, 2014

In the August book we published an article about the Indian equity market and proposed that investing in India is now more of a macro bet. The honeymoon—during which time Indian stocks were bid up from high hopes that the new government would reinvigorate the economy—is over.

Jul 08 2014

Energy Rates At 4-Yr High; Bought Integrated Oil

  • Jul 8, 2014

Strength in the Energy sector has been so compelling that our two recent Energy group allocations together now make up a 10% portfolio weight, after having no Energy exposure from June 2013—April.

Jul 08 2014

Energy Sector Heating Up

  • Jul 8, 2014

We’ve been negative on commodities and most commodity-oriented equities for the last three years, believing that the magnitude of the ramp-up in commodity production capacity over the last decade remains generally underappreciated by investors.

Jun 06 2014

Commodities: Not A New Bull

  • Jun 6, 2014

The year’s second biggest surprise (next to the relentless drop in bond yields) might be the YTD bounce in the major commodity indexes.

May 07 2014

Refiners Group Looks Healthy Once Again

  • May 7, 2014

The only Energy group rated Attractive, its score has improved for seven consecutive months.

Apr 07 2014

Profit Margins At The Sector Level

  • Apr 7, 2014

All ten of the S&P 500 sectors recorded a sequential increase in four-quarter trailing net profit margins. But consider where sector margins stand today relative to their 25-year medians. Eight of ten S&P 500 sectors are recording profit margins well above their long-term medians.

Jan 08 2014

Commodities In 2014: Supply Remains A Concern

  • Jan 8, 2014

While gold garnered most of the headlines last year (down 27%), commodities performed badly across the board in 2013. We expect more of the same in 2014.

Dec 13 2013

All Indices Down, 32 Groups Up In Latest Week

  • Dec 13, 2013
Best Performing Industry Groups
Industry Group 1 Wk
Perf
4 Wk
Perf
YTD
Perf
Broadcasting 2.3% 0.3% 55.8%
Drug Retail 1.9% 1.3% 80.2%
Trading Companies & Distributors 1.7% 0.7% 30.1%
Casinos & Gaming 1.7% 3.8% 65.3%
Oil & Gas Refining & Marketing 1.6%
Nov 07 2013

Supply/Demand Dynamics Drive Three Emerging Market Energy Themes

  • Nov 7, 2013

We find hidden opportunities in Equipment & Services Providers, Coal and Natural Gas. We consider these themes longer term holdings instead of short-term plays

Oct 08 2013

Group Models: Info Tech Tops Domestic, Financials Remain Atop Global

  • Oct 8, 2013

Both models have numerous Information Technology and Financials groups in Attractive territory. Neither model has any Unattractive Tech groups. Alternatively, neither model has any Attractive Utilities groups, while several Utilities rate Unattractive in each.

Sep 10 2013

Group Models: Info Tech Tops Domestic, Financials Tops Global

  • Sep 10, 2013

Both models (particularly domestic) have a number of Attractive rated Information Technology groups and no Unattractive rated Tech groups. Financials’ domination of the Global Attractive range continues.

Sep 10 2013

Sector Margins: Just Thank The Consumer

  • Sep 10, 2013

We’ve noted before that profit margin gains since the technology boom have been primarily a Large Cap phenomenon.

Aug 07 2013

A Comprehensive Look At The Emerging Markets: Diagnosis And Prognosis

  • Aug 7, 2013

We examine Emerging Markets from both the top-down and bottom-up perspectives as we try to identify where to move and what to expect. We check in on two successful EM thematic group ideas as well.

Aug 07 2013

A New Leg In The Commodity Decline?

  • Aug 7, 2013

For more than two years we’ve discussed the supply-side risks to commodity producers stemming from capacity built during the manic “Third Act” of last decade’s Three Act Play in commodities. Commodity-oriented equities have indeed underperformed since 2011, but to date, most pundits have laid blame squarely on the demand side.

Aug 07 2013

Key Observations On Q2 S&P 1500 Earnings

  • Aug 7, 2013

Year-over-year EPS growth rate for companies with Q2 reports (with about 65% in) currently stands at +4.2%, while revenue growth has come in at a better than expected +2.6%.

Aug 06 2013

Group Models Agree On Energy & Materials

  • Aug 6, 2013

But Information Technology rises to the top of the Domestic model, while the trend of Financials domination in the Global model remains intact.

Jul 12 2013

Domestic and Global Group Models: Strong Agreement On Financials

  • Jul 12, 2013

Our Domestic Scores have five Financials groups rating Attractive; these same five industry groups are Attractive in our Global model. In total, seven Financials groups rank Attractive in the Global model, with insurance groups looking particularly Attractive.