Investors might wish to take into account placing cash to work in a lagging a part of the market.
According to VanEck CEO Jan van Eck, oil shares are getting a uncooked deal.
“The [oil] supply is there. The companies are arguably the next best cash flowing companies [compared to] the semiconductors,” he advised CNBC’s “ETF Edge” this week. “They’re trading at double-digit cash flow yields for E&Ps [exploration and production] and sectors in the oil market. No one cares. No one cares.”
His agency runs the VanEck Oil Services ETF. As of Jan. 31, FactSet exhibits the ETF’s largest holdings are Schlumberger, Halliburton and Baker Hughes.
The ETF is down virtually 7% to this point this yr, and it is off greater than 9% p.c over the previous 52 weeks. So far this yr, the S&P 500 is up greater than 5% to this point this yr.
“It’s [energy] underperforming a lot of other things, but not really badly considering the driver for global growth is really on its back right now and could be for a couple years,” mentioned van Eck.
Strategas’ Todd Sohn additionally characterizes oil shares as unloved and sees potential for a turnaround.
“They had pretty large outflows last year. And, if tech were to take a hit at some point in this quarter, I would guess the more tactical folks rotate into stuff like vitality and even well being care,” the agency’s ETF and technical strategist mentioned.
WTI crude simply had its finest weekly efficiency since September — capturing most of its features for the yr this week. The commodity climbed 6% to settle at $76.84 a barrel.