Energy stocks still underpriced?
That's what today's WSJ suggests:
It might not seem possible after the sector's multiyear run. But it's true because investors all along have been pricing these stocks as if the surge in energy prices was temporary, and not a permanent shift in the landscape of the industry. Investors also have been wary of hot sectors after getting burned by the dot-com bubble.
The average price-to-earnings ratio for shares in the Philadelphia Stock Exchange's oil equipment and services index, based on expectations for earnings over the next 12 months, is 15. That's below the 10-year average of 21 times, according to RBC Capital Markets. The overall price-to-earnings multiple for stocks in the S&P 500 index is 16.
Byron King from Outstanding Investments suggests one way to profit from the trend in this DR White Paper.