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Can Energy Stocks & ETFs Continue Their Hot Streak?

  • (1:00) - Why Are Oil Prices Surging?
  • (6:45) - What Impact Will Iran Have On The Oil Market?
  • (9:15) - Low Carbon Emissions: Is The World Ready To Switch To Clean Energy?
  • (12:50) - Should Investors Consider Exposure To Energy Stocks?
  • (18:20) - Top Stock & ETF Picks To Keep On Your Radar
  • (24:45) - Episode Roundup: Podcast@Zacks.com

In this episode of ETF Spotlight, I speak with Sheraz Mian, Zacks Director of Research and a former oil analyst, about investing in the hot energy sector.

Crude prices are up more than 40% this year and 80% over the past year as the demand outlook continues to improve with economies around the world opening up. Oil demand could exceed pre-pandemic levels by the end of 2022, per International Energy Agency. Per WSJ, option traders are betting on return of $100 oil by the end of next year, a level not seen since 2014.

Investors are becoming more socially and environmentally conscious and pouring a lot of money into ESG ETFs. Fund giants like BlackRock and Vanguard continue to push companies on climate progress. Some of the major oil companies have started investing more in renewables.  How will ESG investing trend impact oil and energy companies in the coming years?      

Energy is the best performing sector this year up more than 48%. Sheraz’s favorite energy stocks are: Chevron CVX, Pioneer Natural Resources PXD, EOG resources EOG, Schlumberger SLB and Halliburton HAL. Tune in to the podcast to learn more about them.

The most popular oil ETFs—the United States Oil Fund USO, the ProShares Ultra Bloomberg Crude Oil UCO and the Invesco DB Oil Fund DBO--use different futures strategies to track oil prices. They are good at tracking the commodity in the shorter-term but could perform much worse than the commodity in the longer-term due to contango issues.

For long-term investors, it is better to consider ETFs that hold energy companies, rather than futures. The Energy Select Sector SPDR Fund XLE and the Vanguard Energy ETF VDE are market cap weighted ETFs. Exxon XOM and Chevron account for about 40% of the portfolio.

The SPDR S&P Oil & Gas Exploration & Production ETF XOP is an equal-weighted ETF. It tilts away from the oil giants and toward small- and mid-cap companies.

Make sure to be on the lookout for the next edition of the ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.

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Chevron Corporation (CVX): Free Stock Analysis Report
 
Exxon Mobil Corporation (XOM): Free Stock Analysis Report
 
Schlumberger Limited (SLB): Free Stock Analysis Report
 
Halliburton Company (HAL): Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD): Free Stock Analysis Report
 
EOG Resources, Inc. (EOG): Free Stock Analysis Report
 
Energy Select Sector SPDR ETF (XLE): ETF Research Reports
 
United States Oil ETF (USO): ETF Research Reports
 
Invesco DB Oil ETF (DBO): ETF Research Reports
 
SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research Reports
 
ProShares Ultra Bloomberg Crude Oil (UCO): ETF Research Reports
 
Vanguard Energy ETF (VDE): ETF Research Reports
 
To read this article on Zacks.com click here.
 
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