CRAK - Price Action Suggests Energy To Start Outperforming Against Tech Again
- Energy is starting to outperform tech once again. The recent hiatus is a healthy pause before the bull run resumes.
- By March, we think the outperformance of energy to tech will become more evident. This may coincide with the rapid drop in COVID-19 case counts globally.
- The other fundamental driver of better relative outperformance by February and March will be the potential inventory normalization trend that's currently taking place.
- Most producers in our E&P valuation sheet still show 30%+ free cash flow yields suggesting mass disconnect.
- Alas, if COVID-19 case counts do continue to drop and oil inventories normalize, we should see a fairly rapid response in energy stocks.
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Price Action Suggests Energy To Start Outperforming Against Tech Again