The worst earnings season for energy?companies since 2009 isn?t stopping investors from favoring the?industry above all others this year.
Bloomberg is reporting today that the worst earnings season for energy
companies since 2009 isn?t stopping investors from favoring the
industry above all others this year.
Exchange-traded funds tracking oil and gas shares have
absorbed $5.7 billion in 2015, the most inflows among 12 groups
tracked by Bloomberg. Energy shares may get a boost from Royal
Dutch Shell Plc?s acquisition of BG Group Plc, after the oil and
gas industry?s biggest deal in at least a decade spurred
speculation of further consolidation.
Strategists are forecasting a 63 percent contraction in
first-quarter earnings for energy companies in the S&P 500,
after predicting expansion as recently as October, Bloomberg
data show. That shift, spurred by an almost 60 percent drop in
crude, presents an opportunity for investors looking for
companies that might be able to beat profit predictions, said
Terry Morris of National Penn Investors Trust Co.
?It wouldn?t surprise me if we find out that we?ve notched
expectations down a little too far,? Morris, a senior equity
manager who helps oversee about $2.8 billion at Wyomissing,
Pennsylvania-based National Penn Investors Trust, said by phone.
?You may see energy companies report terrible earnings but rise
because it?s already built in.?
ETF Flows
The $5.7 billion sent to energy ETFs this year compares
with $5.1 billion for health-care companies, the second-best
group among the 12 industries. Energy funds have also been the
most attractive to investors over the last month, drawing $2.9
billion, twice the next-most-popular industry. They attracted
$300 million on Tuesday alone.
Energy stocks have been rebounding after plummeting as much
as 27 percent from a record high in June. Oil and natural-gas
stocks in the Standard & Poor?s 500 Index have climbed 4 percent
since the start of last week, four times the performance of the
benchmark gauge during the period. The gains have come as oil
prices rebounded 22 percent from a six-year low last month. The
group of stocks added 0.1 percent today as of 9:43 a.m. in New
York.
?If you?re a believer that the current oil glut is
temporary and will clear itself eventually, this will be a good
entry point,? Kevin Caron, a market strategist and portfolio
manager who helps oversee $170 billion at Stifel Nicolaus & Co.
in Florham Park, New Jersey, said by phone. ?As long as you
believe that the global economy is fine and have plenty of time
to wait it out, entering now makes some sense.?