The energy sector has had a rough start to 2018. While general confidence in the stock market has waned since the end of last year, there are still plenty of high performing stocks in both manufacturing and technology. Energy, however, has seemingly been left behind.
Some analysts think this could change in the near future, and current growth already suggests that now could be the right time for investors to start spreading their portfolio into some of the popular energy stocks.
Where Was Confidence Lost?
When looking at recent history it is not difficult to understand why many investors are steering clear of the energy sector.
In 2017, most sectors were performing exceptionally well, with an average return of over 22% when considering stocks across the board. However, the energy sector lagged behind the rest, actually declining over the year. With the start of 2018, the confidence still wasn’t there, and the energy sector suffered losses throughout the first quarter.
Good News to Consider
Now that we’re almost through the first month of the second quarter, we can see that things are starting to change. Crude oil prices are rising, and this is helping energy stocks to move up as individual company performance also increases. Crude oil has gained 8.66% over the past three months, 7% over the last four weeks, and 2.43% over the past five days. With this kind of upward trajectory, many analysts are advising investors to take a fresh look at the energy sector.
If we look only at the past month, the energy sector has been the highest performing out of all tracked sectors on the S&P 500 index. ETF’s in energy are performing particularly well, and could be good investment options for anyone looking to diversify.
Examples of Energy Stocks Showing Growth in the Past Month
First quarter performance didn’t offer confidence in the following stocks, however, 1-Month performance now has analysts leaning towards ‘BUY’ on these companies.
- Devon Energy Corp (NYSE: DVN) gained 11.8% in the last month.
- Newfield Exploration Co. (NYSE: NFX) gained 14.96% in the last month.
- Noble Energy Inc. (NYSE: NBL) gained 10.05% in the last month.
Figures are accurate as of pre-market conditions on April 19, 2018.
Should You Risk Investment in the Energy Sector?
The stock market is not unique in the way that investment carries a certain amount of risk. Recent volatility has made investment decisions more difficult than normal. All three of the stocks mentioned are relatively affordable in terms of per-share price. They are also all strong performers when taking the past month into account. Diversifying your portfolio with energy investments could provide returns as the sector continues to display growth.
As always: consider your investments carefully, keep your profile diverse to minimize risk, and never invest more than you can afford to lose.
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