However, investors will not find attractive valuations on lagging energy stocks. At least not at the moment.
“At nearly 28 times forward earnings, the sector’s forward price-earnings ratio is significantly above the second most richly priced sector, consumer discretionary. Its trailing price-to-earnings ratio is 33 times, second only to real estate among the 11 sectors,” reports CNBC.
Related: The Struggle is Real for Energy ETFs
Valuation concerns for the energy sector come even as the sector is featured prominently in an array of value ETFs. However, the sector looks more like a value trap than a legitimate value play over the near-term.
“Energy sector valuations look fairly valued at current levels with an average price/fair value estimate of 0.96,” notes Morningstar. “The consensus outlook is that market fundamentals are now strong enough to remain healthy even after OPEC returns to higher production.”
For more information on the oil market, visit our oil category.