Key Points
- UBS believes Energy stocks will perform well soon, despite their underperformance this year.
- The bank advises investors not to buy Energy stocks right now because others are still selling them.
- Overall economic signs are positive, with business activity looking healthier than expected.
- Utilities and Financials are currently the most popular or “over-owned” sectors.
Energy stocks could be the big winners in the current market, despite having had a rough year so far. That’s the key message from a new report by the investment bank UBS.
The bank is seeing positive signs in the economy, noting that business activity appears to be healthier than previously thought. Both professional traders and everyday investors are investing in the stock market, indicating growing confidence. New business orders also saw a slight improvement in June, particularly in sectors such as Financials and Real Estate.
Based on these trends, UBS believes that stocks that typically grow in line with the economy should perform well. The report identifies the Energy sector as the one that stands to benefit the most from these conditions in the long run.
However, when it comes to Energy stocks, UBS advises patience. The report suggests that it’s not the right time to buy them just yet, as many investors are still selling off their shares in the sector. Currently, other areas, such as Utilities and Financials, are more popular, or “over-owned.”
While the long-term energy outlook appears promising, UBS advises waiting for the current selling trend to subside before making an investment. For now, the bank’s computer models suggest it’s a good time to buy individual stocks across various sectors, rather than focusing on just one.
