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July 18, 2019, 9:33 a.m. EDT

Energy shares could double by 2020, so buy now, says contrarian investor

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By Barbara Kollmeyer, MarketWatch


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Oil’s the place to be, according to one contrarian.

Investors are braced for a third day of losses in a row. We are looking at you, Netflix /zigman2/quotes/202353025/composite NFLX -1.85%  .

Disappointing results from the popular video streamer have scattered investors and dented the mood on Wall Street, even if some analysts are unfazed. To be sure Wall Street puts a lot of faith in technology and internet names, and Netflix has delivered some wild returns over the years. We’ll see if some tech faith can be restored later when Microsoft reports. But for now, it could be rough.

Opinion: With Netflix stock upside down, ‘Stranger Things’ becomes its most important series ever

And maybe look elsewhere, as our call of the day suggests, with a strong recommendation to start buying energy shares – now.

“Of all the buying opportunities since the incredible bargains of the first several weeks of 2016, buying energy shares near current levels is one of the most important and reliable ones,” Steven Jon Kaplan of the True Contrarian blog and newsletter told subscribers.

The widely followed Kaplan believes energy shares could double or more by summer 2020 if not sooner. His newsletter has been around since 1996 and he’s been trading since 1981.

He’s excited by the “intensity of insider buying” for U.S.-listed energy names over the past week, which he says is nearing all-time record highs. That refers to share buying by company executives and directors, which is a great indicator of the health of a business because no-one knows the firms better. Some believe that if those inside the company are buying, then that’s a green flag for everyone else.

As well, Kaplan notes that such insider activity in the past for oil shares has been followed by “dramatic outperformance” for energy shares.

How to play it? He suggests buying the SPDR S&P Oil & Gas Equipment & Services exchange traded fund /zigman2/quotes/203361461/composite XES -5.38%  , FCG First Trust Natural Gas ETF /zigman2/quotes/209055321/composite FCG -4.30%   and VanEck Vectors Oil Services ETF /zigman2/quotes/207596637/composite OIH -4.78%  .

He says those with a Fidelity account should buy the iShares U.S. Oil Equipment & Services ETF /zigman2/quotes/206923360/composite IEZ -4.85%   or Fidelity MSCI Energy Index /zigman2/quotes/202486535/composite FENY -3.37%  rather than XES. For Schwab or ETrade trade clients, he suggests the Invesco S&P 500 Equal Weight Energy ETF /zigman2/quotes/202956392/composite RYE -4.03%  , as it’s commission free.

Read: Oil stocks have lagged the S&P 500 in 2019 but Wall Street loves them

The market

The Dow /zigman2/quotes/210598065/realtime DJIA -2.37%  , S&P /zigman2/quotes/210599714/realtime SPX -2.59%   and Nasdaq /zigman2/quotes/210598365/realtime COMP -3.00%  are lower as trading kicks off.

Gold /zigman2/quotes/210037406/delayed GCQ19 +0.04% is up, while oil and the dollar /zigman2/quotes/210598269/delayed DXY -0.92% are softer.

Read: Bridgewater’s Ray Dalio says gold is a good ‘portfolio diversifier’

/zigman2/quotes/202353025/composite
US : U.S.: Nasdaq
$ 291.44
-5.49 -1.85%
Volume: 6.33M
Aug. 23, 2019 4:00p
P/E Ratio
114.29
Dividend Yield
N/A
Market Cap
$127.60 billion
Rev. per Employee
$2.22M
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/zigman2/quotes/203361461/composite
US : U.S.: NYSE Arca
$ 6.86
-0.39 -5.38%
Volume: 1.38M
Aug. 23, 2019 8:00p
loading...
/zigman2/quotes/209055321/composite
US : U.S.: NYSE Arca
$ 10.67
-0.48 -4.30%
Volume: 401,235
Aug. 23, 2019 8:00p
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/zigman2/quotes/207596637/composite
US : U.S.: NYSE Arca
$ 10.96
-0.55 -4.78%
Volume: 9.39M
Aug. 23, 2019 8:00p
loading...
/zigman2/quotes/206923360/composite
US : U.S.: NYSE Arca
$ 16.49
-0.84 -4.85%
Volume: 44,944
Aug. 23, 2019 8:00p
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/zigman2/quotes/202486535/composite
US : U.S.: NYSE Arca
$ 14.89
-0.52 -3.37%
Volume: 486,724
Aug. 23, 2019 8:00p
loading...
/zigman2/quotes/202956392/composite
US : U.S.: NYSE Arca
$ 41.07
-1.73 -4.03%
Volume: 65,990
Aug. 23, 2019 8:00p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
25,628.90
-623.34 -2.37%
Volume: 364.26M
Aug. 23, 2019 5:10p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
2,847.11
-75.84 -2.59%
Volume: 2.35B
Aug. 23, 2019 5:10p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
7,751.77
-239.62 -3.00%
Volume: 1.85M
Aug. 23, 2019 5:16p
loading...
/zigman2/quotes/210037406/delayed
US : U.S.: Nymex
$ 1,526.60
+0.60 +0.04%
Volume: 983.00
Aug. 25, 2019 5:07p
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/zigman2/quotes/210598269/delayed
US : U.S.: ICE Futures U.S.
97.26
-0.91 -0.92%
Volume: 0.00
Aug. 23, 2019 6:00p
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