Energy has outperformed all other sectors this year, but Gilman Hill’s Jenny Harrington says many of these stocks still have low valuations, making up for a good buying opportunity.
The Energy Select Sector SPDR Fund is currently up nearly 40% on a year-to-date basis.
Harrington’s bullish case for the energy sector
Jenny has sizable stakes in several energy stocks, including Chevron, Kinder Morgan, PPL Corp, and Duke Energy. Defending her hawkish stance on the sector, she said on CNBC’s “Halftime Report”:
Energy stocks have done nothing over the past five or ten years, which leaves them today in a position of having great free cash flow, great dividend yields, and super low price to earnings ratios.
During the same interview, Sarat Sethi said the way to play the energy space was to stick with names that have solid, diversified balance sheets. He picked Chevron, EOG, and Shell as some of his favourites.
Harrington sees continued demand for energy products
According to Harrington, the push in renewables and green energy is far from removing the global reliance on oil and gas companies.
Her remarks follow a report by JPMorgan’s Marko Kolanovic on Wednesday that said oil could go to $130, which Harrington says speaks to the demand for the products these fossil fuel companies make. She added:
I think there’s still a long runway where we can make money in energy. Even though they’re up a lot, I still think it should be pretty easy to make money in energy for some time to come.
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