ETF giant: US oil stocks are “just as good” as chip stocks, but no one cares

wallstreetcn ·  02/12 23:17

Source: Wall Street News Author: Ge Jiaming

Vaneck's CEO said bluntly that the oil supply is sufficient and the oil company's cash flow is strong, but oil stocks are being overlooked in the market.

CEO VanEck of investment consulting firm VanEck said bluntly that US oil stocks have been ignored by the market and treated unfairly, and investors with a more “strategic vision” may switch to energy stocks in the future.

On February 10, Vaneck's CEO Jan van Eck pointed out that oil supply is sufficient and oil companies' cash flow is strong, but oil stocks are not receiving enough attention in the market. The oil industry's exploration and production sectors have double-digit returns on cash flow, but the market doesn't care.

VanEck is an American asset management company, mainly engaged in the issuance and management of ETFs and mutual funds, and also operates hedge funds and separate accounts. As of 2020, VanEck invested 69 billion US dollars in asset management, making it the 7th largest ETF issuer in the US.

As of January 31, Vaneck's largest oil services ETF (OIH) holdings were$Schlumberger (SLB.US)$,$Halliburton (HAL.US)$and Beck Hughes. OIH has declined by nearly 7% this month, and has fallen by more than 9% in the past 52 weeks. Meanwhile, the S&P 500 has risen by more than 5% so far this year, and the overseas chip stock carnival continues to rise.$Invesco Great Wall Global Semiconductor Chip Industry Equity Fund(QDII-LOF)-A(CNY) (501225.SH)$The increase in the last week reached 3%.

At a time when oil stocks continue to fall, Vaneck and Strategas' ETF and technology strategist Todd Sohn are optimistic about the future of oil stocks. They think if tech stocks take a hit this quarter, some more tactical investors may switch to energy stocks or healthcare stocks. Furthermore, WTI crude oil prices recently recorded their best weekly performance since September last year, indicating signs of recovery in the energy market.

media statistics,$Exxon Mobil (XOM.US)$,$Chevron (CVX.US)$,$Shell PLC (SHEL.US)$,$TotalEnergies (TTE.US)$und$BP PLC (BP.US)$In the face of a sharp drop in crude oil prices in 2023, a record $113.8 billion was spent on dividends and share repurchases.

The oil industry's cash return in 2023 was 76% higher than the average during the heyday of the industry in 2011-2014, when crude oil prices hovered above $100 per barrel.

Oil company CEOs are actively expanding the scale of share buybacks, but investors don't seem to be buying it so far.

The valuation of US oil stocks is only half that of large technology stocks. Investors generally believe that the oil industry's cash flow is cyclical, overly dependent on OPEC decisions, and threatened by the global shift from fossil fuels.

Executives of the five major oil giants mentioned above all said that as long as commodity prices remain stable, they may pay more dividends to shareholders this year.


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