Just Knocked Down a Few Pegs
I was struck recently at how disparate the fortunes of various sectors have been so far in 2012. On the one hand, Technology and consumer discretionary stocks have posted healthy gains so far this year, rising by 10% or more. Other corners of the market have been less fortunate: the Energy Select Sector SPDR (XLE), for instance, has fallen by about 5% in 2012, putting it at the back of the sector pack.
As I'm handicapping the race for the remainder of 2012, I like this horse that's drifted to the back as a result of fading interest from investors. The XLE was recently trading at a forward price-to-earnings multiple of only about 10x. By comparison, the Consumer Discretionary SPDR (XLY) has a forward P/E of about 15x, and the broad-based SPDR S&P 500 (SPY) is going off at about 12.5x forward 12 months earnings. In other words, energy stocks are trading at a meaningful discount to their peers in the consumer discretionary sector, and well below broad-market multiples....331 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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