Energy Remains the Most Undervalued Sector
We expect a nearly complete recovery in crude demand as the pandemic subsides in 2021.
Following positive coronavirus vaccine trial reports and regulatory approvals in the fourth quarter, the Morningstar US Energy Index rose an impressive 29% in the fourth quarter, outpacing the overall market. Year to date, the outsize impact of the pandemic on crude-oil demand and prices has contributed to a 33% fall in the index versus a 19% return for the market. As initial inoculations continue to be carried out, renewed confidence in a pickup of global crude consumption in 2021 will be a major driver of performance in the first quarter. Energy remains the most undervalued sector, trading at a 22% discount compared with a 6% premium for the overall market.
Stocks are still trailing the broader market, despite the rally - Morningstar
Dave Meats does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.