Expert Roundtable: Looking at Oil Stocks? Buy These Instead
Oil prices have recovered over the past couple of weeks, but are still down more than 60% since early January. As a result, just about every company involved in the oil industry will lose money this year, and many won't survive. That's why, even with the stock market having recovered much of its losses suffered in late February and early March, oil stocks still, as a category, look very cheap. For instance, the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) is down about 15% from the pre-crash high at recent prices, while the Energy Select Sector SPDR ETF (NYSEMKT: XLE) is still down nearly 40%.
As a result, many investors are looking at oil stocks for bargains. The catch, of course, is that even as we are on the cusp of seeing more of the economy open up in the weeks ahead, oil demand is expected to be below 2019 levels for months to come, resulting in a continued expansion in the oversupply that's pushed prices down. For many oil stocks, this massive glut of oil will push the benefits of the economic recovery even further into the future.
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Source Fool.com
