The rally in energy stocks from mid-March has taken a breather. On June 8, the S&P 500 Energy Sector Index reached its highest point since early February, up 97 percent from its March 18 low. A few days later, it was down more than 17 percent.
Other indexes have followed the same pattern. Super majors-focused NYSE Arca Oil Index (NYSE: XOI) returned better than 105 percent from mid-March to June 8, only to give back roughly 17 percent. And the midstream-heavy JP Morgan Alerian MLP Index ETN (NYSE: AMJ) retreated 16 percent, after running higher by 152 percent.
Even at their most recent peak, none of these indexes were anywhere close to where they started 2020. But like the rest of the stock market and oil prices, they had come a long way in a great hurry. And that’s typically when a market takes a breather.
As energy stocks have climbed the past few months, we’ve consistently emphasized the need to focus on the best in class companies. At the same time, we’ve warned not to confuse rallies in weaker companies as a sign of underlying business improvement. Rather, this is likely to be a last, best opportunity to unload them.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Jun. 30, 2020
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.