Oil stocks should be popular as semis, but no one cares: CEO VanEck
Investors may want to consider putting money to work in a weak part of the market.
According to VanEck CEO Jan van Eck, oil stocks are getting a crude contract.
“The [oil] there is supply. The companies are arguably the next best cash flow companies [compared to] the semiconductors,” he told CNBC’s “ETF Edge” this week. “They’re trading at a double-digit cash flow yield for E&Ps [exploration and production] and sectors in the oil market. Nobody cares. Nobody cares.”
His company runs the Information about the company VanEck Oil Services ETF. As of January 31, FactSet shows that the ETF has the largest holdings Schlumberger, Halliburton and Baker Hughes.
The ETF is down nearly 7% so far this year, and is up more than 9% percent over the past 52 weeks. So far this year, the S&P 500 is up more than 5% so far this year.
“There are [energy] we are not achieving many other things, but seriously because the driver for global growth is really on its back now and it could be for a few years,” said van Eck.
Strategas’ Todd Sohn also identifies oil stocks as unpopular and sees potential for a reversal.
“They had some pretty big flows last year. And, if technology were to take a hit at some point this season, I’d bet the most inventive people would turn to stuff like energy or even health care“, said the company’s ETF and technical strategy.
WTI crude just had its best weekly performance since September – capturing most of its gains for the year this week. The commodity climbed 6% to settle at $76.84 a barrel.