Oil stocks should be popular like semis but no one | allsaxmusic

Investors may want to consider putting money to work in a lagging part of the market.

According to VanEck CEO Jan van Eck, oil stocks are getting a raw deal.

« The (oil) supply is there. The companies are arguably the next best cash flowing companies (compared to) the semiconductors, » he told CNBC’s « ETF Edge » this week. « They’re trading at double-digit cash flow yields for E&Ps (exploration and production) and sectors in the oil market. No one cares. No one cares. »

His firm runs the VanEck Oil Services ETF. As of Jan. 31, FactSet shows the ETF’s largest holdings are Schlumberger, Halliburton and Baker Hughes.

The ETF is down almost 7% so far this year, and it’s off more than 9% percent over the past 52 weeks. So far this year, the S&P 500 is up more than 5% so far this year.

« It’s (energy) underperforming a lot of other things, but not really badly considering the driver for global growth is really on its back right now and could be for a couple years, » said van Eck.

Strategas’ Todd Sohn also characterizes oil stocks as unloved and sees potential for a turnaround.

« They had pretty large outflows last year. And, if tech were to take a hit at some point in this quarter, I would guess the more tactical folks rotate into stuff like energy or even health care, » the firm’s ETF and technical strategist said.

WTI crude just had its best weekly performance since September — capturing most of its gains for the year this week. The commodity climbed 6% to settle at $76.84 a barrel.

By Liam