Opinions
Mike Philbrick
Horizons S&P/TSX Capped Energy Index
HXE-T
BUY
Nov 15, 2022
oil There's underproduction of oil and supply constraints. Also, US oil reserves were drained before their elections and now needs to be filled whenever oil dips to $70. So, oil has a floor and there remains demand. A good sector to own, especially if China opens next spring. XEG holds Canadian oil stocks, and is market-cap weighted, including CNQ, Suncor and Cenovus among its top holding. ZEO is an equal-weight, so offers a little more diversity. And HXE is the cap-weighted ETF like XEG, but it doesn't pay a dividend. So this is good outside an RRSP. For midcap oil, look at NNRG, but charges a higher MER. It depends on your tax preference and the contents of each ETF.
$33.290
Stock price when the opinion was issued
E.T.F.'s
It's the ideal tool to help you make quicker, more informed decisions for
managing and tracking your investments.
You might be interested:
TOP PICK
It is a call on oil. People are saying Canadian oil stocks just pulled back because of potential border taxes, but US oil stocks did the same thing. We are starting to break out right at the beginning of their seasonal period. Feb. 25 until May 9, oil stocks tend to do well. Technically and seasonally it is the right time to step into oil stocks.
E.T.F.'s
TOP PICK
It's capped but a total return index, covering energy. We're on the cusp of oil seasonality, and oil has been doing well since October. That said, oil is way off the highs from 18 months ago. We're seeing higher lows on the HXE chart, which is good. Feb. 25-May 9 is oil seasonality. Geopolitical tensions may help HXE and oil, but still have a ways to go.
E.T.F.'s
DON'T BUY
Energy ETF Commodities are sensitive to the cycle: warning. Suggests XEG or HXE, both market-cap weighted in oil producers, but they are dominated by Suncor and CNQ (over 50% of these ETFs). For more diversification, look at equal-weighted ZEO-T. But he prefers HUC-T because it gives you commodity--and not commodity stock--exposure. For all of these, be very, very careful--there could be severe drawdowns in energy if the economy falters in the next 12 months.
E.T.F.'s
TOP PICK
It is a capped fund and a play on energy which faces a bumpy road. The longer term secular has a positive skew to energy stocks. Because of ESG and the environmental concerns we have under-invested in the production and development of oil and gas and therefore there is a tightness in the supply chain. Start to pick at them, take your time and be patient. Use cyclical draw-downs to build and maintain portfolio positions.
E.T.F.'s
Advertising