Energy Remains the Most Undervalued Sector

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