Most Wall Street analysts believe this state of energy stocks will continue into 2023.
[Financial Channel/Comprehensive Report] Energy stocks will outperform the U.S. stock market for two consecutive years, and most Wall Street analysts believe that this state of energy stocks will continue until 2023. One of the main reasons is that the valuation of energy stocks is still low , the P/E ratio is attractive.
"Bloomberg" reported that energy stocks soared by about 55% in 2022 and are expected to hit a record high, while the second-ranked S&P 500 index's 11 major sectors barely rose, and the gap is quite huge.
Entering 2023, the outside world also has doubts about the prospects of energy stocks, but energy stock bulls believe that the industry is still attractive, pointing out that energy stocks are still in the S&P 500 sector, and the price-to-earnings ratio is still very low. As the war continues, oil prices are expected to stabilize.
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Ben Cook, portfolio manager at Hennessy Funds, expects oil and gas stocks to outperform again in 2023, highlighting that they have the highest free cash flow yield of any sector, and it looks like energy stocks will continue to outperform. 3 years outperform the market.
Despite the drop, some analysts believe prices have found a floor as the war between Russia and Ukraine drags on, Chinese demand rebounds and OPEC may cut output.
The median forecast compiled by Bloomberg for U.S. West Texas Intermediate crude trades at about $93 a barrel through 2023, compared with about $75 a barrel now.
Bloomberg Intelligence believes that oil prices may rebound to $108 a barrel.
Overall, Wall Street is relatively optimistic about energy stocks, believing that the potential upside for energy stocks in 2023 is about 16%.
The upside of the broader market is 10%. At the same time, as many as 61% of energy companies in the S&P 500 index hold buy ratings, compared with 55% of the S&P 500 constituent stocks as a whole.
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