Gavekal Capital: Energy Is Flying High This Quarter

Thursday, May 8, 2014

Energy Is Flying High This Quarter

Energy stocks have dominated the market so far during the 2nd Quarter (and to an extent so far this year). The average Energy stocks is up over 5% QTD compared to the average stock which is actually slightly negative (-0.4)

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95% of the Energy stocks are trading above their 65-day moving average as well as 31% are trading at 65-day highs. At the other extreme are IT stocks. Only 36% of stocks are trading above their 65-day moving average and only 3% of stocks are at 65-day highs.

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97% of Energy stocks are within 10% of their 3-month high and zero stocks are greater than 20% from their 3-month high. This is in stark contrast to IT stocks where 10% of the stocks are in a bear market over the past three months.

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An impressive 87% of Energy stocks are outperforming the MSCI World Index over the last three months. Utilities is actually the clubhouse leader in this statistic with a whopping 95% of stocks outperforming the MSCI World Index.  Only 34% of Health Care stocks have outperformed over the last three months.

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Energy has the highest average sales growth expectations over the next four years (8.5%) and the second highest average EPS growth expectations (16%). Energy has also had the smallest decline in FY1 EPS estimates over the past three months. On average, EPS estimates have dropped by 1.9%. Energy EPS estimates have fallen only by about half of that (-0.9%).

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