Of course, the upside of XLE’s recent downside is favorable valuations have emerged, a potentially rewarding catalyst at a time when investors continue favoring value sectors.
“Profit expectations have been deteriorating rapidly as oil prices have fallen, and OPEC’s recent decision to maintain production levels is confirmation that larger supplies from America’s shale oil & gas revolution means lower energy prices–great for consumers but a threat to the long-term profitability of Energy firms. The Energy sector appears attractive in terms of valuation, but momentum isn’t currently in the sector’s favor,” said AltaVista.
The bullish view of XLE comes at a time when the ETF is usually known for strong performances. Though this December could easily be different, XLE has historically been the second-best of the nine sector SPDRs in December dating back to 1999, trailing only the Materials Select Sector SPDR (NYSEArca: XLB). [Best Sector ETFs for December]
AltaVista estimates XLE’s 2015 P/E ratio at 13.7 with a price-to-cash flow ratio of 6.2.
Energy Select Sector SPDR