2024-06-14 14:53:56 ET
Summary
- XLE has the highest shareholder yield in the S&P 500 Energy sector at 7.6%.
- With a P/E in the low teens, the valuation case is very strong.
- But XLE faces technical challenges with a bearish false breakout risk, and I note key levels on the chart to monitor.
- At a time when bonds fail to offer diversification benefits, XLE can buck the S&P 500's trend at times.
While domestic and global oil prices have hovered in the mid-$70s to mid-$80s lately, and as oil volatility, as measured by the CBOE Crude Oil Volatility Index (OVX) now sits at multi-year lows, shares of US oil and gas companies have dropped to the worst marks relative to the S&P 500 going back to April 2022. It comes as the Information Technology sector now commands a more than 30% weight in the SPX. Everything outside of TMT, it seems, has been left in the dust during this recent surge in AI euphoria....
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XLE: The Biggest S&P 500 Sector Shareholder Yield, A Compelling Value Case