Reasons why the Oil & gas sector is a BUY.
To date, we believe that the European market is the one with the best risk opportunity ratio thanks to a general underperformance compared to other markets. This is justified by the greater European disharmony at the political level which has slowed down some interventions. However, we believe that the current situation will lead to greater cohesion and therefore to a strengthening of Europe.
From a medium-term perspective, at sector level we prefer sectors that in our opinion have excellent potential not yet expressed in their prices. The Oil & gas sector is one of them. There are many reasons that lead us to believe that it can work optimally in the future.
- The oil prices. The lockdown of global economies has led to the largest collapse in the history of oil, causing a drop in oil companies' spending and investments, and a collapse in production potential. We believe this will cause prices to rise when economies return to full capacity. For years, oil and gas will be the main source of energy. Renewable sources will need time to replace them.
- On a global and especially European level, many funds will be invested to accelerate the production of energy from sustainable sources.
- Companies in this sector generally have extremely strong balance sheets and have proven to be able to adapt quickly to changing market conditions. We live in a world that has and will increasingly need energy.
For these reasons we believe that the Oil & gas sector is a BUY and we are also positive towards all subsectors related to it. More specific analyzes will follow on the stocks that are most interesting to us.