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With the collapse in oil prices, energy stocks may seem like the last place you'd want to be, but one strategist says they could be the sleeper hit of 2015.
The S&P 500 Energy Index's historical performance shows that energy stocks have never fallen for two consecutive years in a non-recessionary environment, David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates told CNBC on Thursday.
"We have never seen two down years in a row outside of a recession – so if you are indeed of a bearish mindset for the energy sector for the coming year, keep that in mind; you are making an implicit bet on a U.S. or global recession (low odds, in my view)," Rosenberg wrote in an op-ed in Canadian newspaper The Globe and Mail earlier this week.
When energy stocks have a bad year outside the context of a global recession, they typically bounce 15 percent the following year, he said.
Energy companies in the S&P 500 declined 10 percent in 2014, tracking the 50 percent decline in oil prices over the past six months.
Timing the market
Rosenberg, however, cautions that investors should wait a few months before gaining exposure to the space.
"I don't think you have to get in right now [because] the oil price has some downside potential. But at some point this year, it's going to be a very attractive opportunity," Rosenberg said in an interview with CNBC.
"My sense is that, sometime in the second quarter, if I had to time it, we may find valuations improve more dramatically and provide a more compelling picture in terms of dipping some toes in the energy space," he said.
His shopping list will include low-cost oil and gas producers with strong balance sheets who can weather the storm, including Canada-based Pine Cliff Energy, Arc Resources, Kelt Exploration, Suncor and Canadian Natural Resources.
Oil prices have been on a slippery slope amid an environment of feeble global demand and strong supply growth.
U.S. crude edged up to $48.79 per barrel on Thursday after plumbing a 5-1/2-year low of $46.83 in the previous session. While, Brent dropped by 26 cents to $51 a barrel. It had fallen to $49.66 on Wednesday, its lowest since May 2009.
Analysts expect prices will fall further from current levels, due to a variety of supply factors including increased oil exports out of the U.S. and record production levels from Iraq and Russia.
Rosenberg predicts oil prices will dip to around $40 in the coming months before settling into a range of $50-70 next year.
Audrey Goh, equity strategist at Standard Chartered said she wouldn't be surprised if oil stocks rebounded at some point this year.
"Expectations for energy equities are low and they have been significantly oversold. Given how much earnings [projections] have already been cut i.e. by over 20 percent, energy stocks may stay resilient even as oil prices may fall further in the short-term," Goh said.
"We prefer the integrated majors given their relative stronger balance sheet," she said, referring to companies that engage in the exploration, production and distribution of oil and gas.
Caution warranted
Not all are convinced that history will repeat itself this year, however.
"I'm not interested in numerical or technical arguments. I look at the real economy and how it behaves," said said Uwe Parpart, managing director and head of research at Reorient Financial Markets.
"Obviously if oil prices recover, then energy stocks will do ok, that's a very big if. I don't see any immediate reason why oil prices should return to where they were last fall [in the $90-$100 range] prior to the price collapse," he said, citing slow growth in the global economy and a continued supply glut in the oil market.
"Oil prices would need to reach $75-$80 before I re-look at the energy space," he said.
Parpart, however, doesn't see prices heading to those levels this year and is skeptical they reach there next year either.
Ansuya HarjaniWriter, CNBC Asia
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