Indeed, the momentum darlings from biotech, internet, and social media have taken a severe hit. And many of the highly popular but lower quality/overvalued stocks like Netflix (NFLX) and Tesla Motors (TSLA) have been taken out to the wood shed. During cleansing periods like this,
In an expensive market investors should look for the best combination of value and growth in making sector allocations.
The Energy sector was among the worst performing sectors within the S&P500 with earnings declining by 4.4% year on year. The sector was lead lower with earnings declines at the majors Exxon Mobil (XOM) and Chevron (CVX). The refiners were a relative bright spots with Valero (VLO) and Phillips (PSX).
According to S&P Energy sector earnings in the S&P500 are projected to grow by 14.0% in 2014 and by 12.44% over the five years. At the same time Energy trades at forward price to earnings multiple of 13.52 - a 13% discount to the market multiple of 15.6
Measured by the popular PEG ratio the energy sector is at 1.09, the lowest multiple among S&P500 sectors except consumer discretionary at 1.06.
Based on the above energy sector offers the best value