Tags: Coffina | energy | stocks | oil

Morningstar's Coffina: Energy Stocks Provide Attractive Buying Opportunity

By    |   Monday, 29 December 2014 03:01 PM

While the S&P 500 index climbed to a record high this week, the S&P 500 Energy Index has produced a negative return of 10.3 percent this quarter, as oil prices plunged to a five-year low.

That dichotomy makes energy stocks attractive, says Matthew Coffina, editor of the Morningstar StockInvestor newsletter.

"Our contrarian take on energy has a simple explanation," he writes on Morningstar.com. "Investors are terrified of the collapse in crude oil prices since June, but our analysts think this is a temporary setback."

Morningstar's long-term forecast remains at $90 a barrel for West Texas Intermediate crude, which settled at $53.78 Tuesday. It defines long term as all the years following the next three.

Natural declines in supply, resulting from consumption, and the fact that additional supply is in remote locations will boost crude prices, Coffina says.

In addition, "as of mid-December, the median energy stock in our coverage universe was trading 27 percent below our fair value estimate, making energy the cheapest sector on that measure by far," he writes.

Others share Coffina's bullishness.

"We're eager to accumulate a sizeable position in energy over time, and we've started that process with a couple of small buys," Keith Goddard, chief investment officer at Capital Advisors, tells The Wall Street Journal.

"There are stocks you can buy right now where you'll do fine for the next three-to-five years, but the guessing game is whether you'll be able to get them at even better prices," he said.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Finance
While the S&P 500 index climbed to a record high this week, the S&P 500 Energy Index has produced a negative return of 10.3 percent this quarter, as oil prices plunged to a five-year low.
Coffina, energy, stocks, oil
247
2014-01-29
Monday, 29 December 2014 03:01 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved