Energy Gets Back into Buying Range Now

Investors looking to consistently outperform the market should follow market rotation. That simply means avoiding sectors that have recently performed well, instead opting to buy sectors that have been out of favor.

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  • For the month of May, tech stocks dominated. Software-related tech plays saw a nearly 10 percent rise. On the other end of the spectrum, the energy sector was the loser, with about a 10 percent decline.

    Since energy prices tend to fluctuate over time, investors interested in the space should look at a diversified long-term play when oil drops under $70 per barrel. One name in the space that looks attractive is Chevron (CVX).

    The oil giant was recently upgraded by analysts, and as a big oil play still trading at a solid value, it’s easy to see why. Shares go for about 9 times earnings right now, making it cheap among the major oil and gas stocks.

    Action to take: Investors can also get a 3.9 percent dividend at current prices. That’s on the higher end, although not the highest, for the sector. Chevron has a history of steady dividend growth as well, which works out great for long-term investors.

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  • For traders, the recent pullback in the stock should end soon with a rebound. The September $165 calls, last going for about $3.25, should see mid-double-digit gains from such a move.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.