My Favorite “Dark Horse” Sector for 2018

Mike Larson

Is it really 2018 already? Wow!

I have to tell you, when I was a kid watching cartoons like the Jetsons or movies like Star Wars, I thought we’d all be driving flying cars or reading about settlers on Mars by now. But I suppose I shouldn’t be TOO disappointed.

After all, we’re all walking around with smartphones in our pockets that have thousands of times more computing and data-processing power than my Commodore 64 ever did. We’re starting to see self-driving vehicles on TV or in the passing lanes next to us. And if you believe visionaries like Elon Musk, the dream of humans living and working on Mars isn’t all that far off.

In any event, I wanted to wish you a Happy New Year personally … and get your investment portfolio started off in the right direction … by talking about my favorite “Dark Horse” sector for 2018.

Everything I’ve written in the past few weeks has focused on the best-performing, highest-rated ETFs, the best-performing, highest-rated stocks, and the best-performing fixed-income investments. But this sector looks like it could come roaring back in the coming months, and pay off handsomely for you.

I’m talking about energy. You probably remember from my S&P Sector Winners and Losers in 2017 Screener that the Energy Select Sector SPDR Fund (XLE, Rated “C”) badly lagged the SPDR S&P 500 ETF (SPY, Rated “B”) last year. But check out this chart below.

It compares the BUY/SELL ratio for our entire Weiss Ratings stock coverage universe to the BUY/SELL ratio for the energy stocks we follow. As the name suggests, our BUY/SELL ratios simply measure how many stocks are rated BUY (“B-” or higher) in our system against how many are rated SELL (“D+” or lower). I indexed the two ratios to 100 to help highlight relative changes between them.

Data Date: 12/28/2017

You can see that the energy ratio (the black line) was badly underperforming the overall ratio (the green line) throughout the summer and fall. But that really started to change as energy stocks gathered momentum heading into 2018.

A key reason is that crude oil looks like it has FINALLY completed a long-term bottoming pattern, one the commodity has been working on since the end of 2014. If crude oil futures can convincingly break above this $60-$63 area of technical resistance, both oil itself and energy stocks could really be off to the races. I see that as likely given that U.S. and foreign economies are gathering steam, and “growthier” sectors like industrials, financials, and materials (ex-energy) are on the march already!

Diversified energy ETFs or mutual funds are possible ways to play this move in 2018. Or you can get my two favorite energy sector recommendations … recommendations that are spinning off juicy dividends to boot … in my High Yield Investing newsletter.

One of the stocks I’ve identified yields almost 8%, and just exploded out of a 13-month trading range. My subscribers already had the chance to rack up double-digit profits on it in 2017, and I expect even more big gains in 2018.

The other stock has done even better – racking up profits of more than 18% in just three months late last year. It’s getting closer and closer to setting an all-time high, and if that happens, it won’t have any resistance standing in its way.

Click here if you want more information on these stocks. Or if you prefer, call my customer service team at 877-934-7778 and they’ll get you taken care of. This dark horse sector looks like it wants to make up for lost time this year, and I’d hate for you to miss out on that profit opportunity!

Until next time,

Mike

Mike Larson is a Senior Analyst for Weiss Ratings. A graduate of Boston University, Mike Larson formerly worked at Bankrate.com and Bloomberg News, and is regularly featured on CNBC, CNN, Fox Business News and Bloomberg Television as well as many national radio programs. Due to the astonishing accuracy of his forecasts and warnings, Mike Larson is often quoted by the Washington Post, Chicago Tribune, Associated Press, Reuters, CNNMoney and many others.