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XLE trade ideas

Energy the only sector not looking overvalued right nowDespite a big end-of-year rally in both oil and energy stocks, the energy sector remains attractively valued at the end of 2019. In fact, energy is the *only* sector that's attractively valued right now. XLE has a reasonable P/E of 15, a price-to-book ratio of 1.5, and a dividend yield at 3.7%. That's a solid return on capital, handily beating the 2.32% yield on treasuries and the 2.2% yield on the top dividend fund, DGRO. DGRO's P/E is over 18 and its price-to-book is 1.9, meaning that in that fund you pay quite a bit more for a lower yield. The dividend yield on XLE has been improving for a couple years now, and I think the 4% dividend level is psychologically significant enough that we'll find a lot of support at that level. Some individual energy stocks, like ET and OXY, even offer dividends near 10% right now. In an overall extremely overbought market with some ongoing recession risk, this is a relatively safe long-term play that offers good value and solid returns. Did I mention that seasonal cycles favor oil right now? December through July are the traditional bull months for oil, according to the Stock Traders' Almanac. Rising geopolitical tensions with Iran and a cooling trade war with China also favor oil strength for the near future.
AMEX:XLELong
by ChristopherCarrollSmith
5
[Year End Thoughts] My 2020 Outlook.Rather than chasing the US equity bubble up here, I want to gross up when I can (on dips) in Energy, Real Estate, and Gold. Energy is one of my best idea longs for the beginning of 2020. - XOM is at 12-year rock bottom prices and will pay you a dividend to wait for the eventual uptick in Oil. - The Fed is determined to "run inflation hot" even though CPI is already over 2%. We are going to get more inflation. - Recent presentations by Mike Gordon on Hedgeye: www.youtube.com - and on MacroVoices: www.youtube.com - and a BofAML note: pbs.twimg.com CNQ has already begun severely outperforming the US energy sector. They are a Canadian Oil Sands producer with excellent fundamentals: Attached to the long Energy thesis is long Russia. Russia is a huge energy producing country and will benefit from increased prices. Weekly chart of Russia ETF (RSX): Related, Sberbank: And Gazprom: I like real-estate in an inflationary environment. In particular, tech-related Real Estate: And of course Gold. I expect Gold to continue its bull run soon, within a week or two. However as one of the most manipulated markets, it can be very difficult to trade. I suggest slowly buying physical every time it goes down. I believe the US stock market would have already collapsed, owing to liquidity problems indicated by the extreme spike in Repo rate to 10%. Had the Fed not begun throwing the kitchen sink at the problem, we would have already seen a deflationary bust. It seems like that money has flown into the S&P and AAPL: I'm not entirely convinced that this WON'T end in a Venezuelan or Argentina style hyperinflation. So, I think foreign diversification (Russia and Gold) are essential holdings.
AMEX:XLELong
by tangman