Energy investors looking for a gusher in second half

investmentnews.com:

Republicans may be cheering “Drill, baby, drill” at their convention next week, but a Democratic President is typically better for oil and natural gas stocks, says Ben Cook, portfolio manager for the Hennessy Energy Transition Fund.

“Historically speaking, a Democrat in the executive branch of the office has actually been better for commodity prices,” said Cook. “The policies that typically restrict the projects that ultimately facilitate the production and transportation and storage of energy tend to limit the amount of supply in the market and, and ironically, lift commodity prices, which helps energy producers.”

Energy investors like Cook are expecting a strong finish to 2024, and they expect the tailwinds for the sector to come from more than just the race for the White House. First and foremost, they believe energy stocks have a lot of catching up to do.

Energy stocks in the S&P 500, as measured by the Energy Select Sector SPDR ETF (Ticker: XLE), are up just over 6 percent year-to-date. The overall S&P 500 meanwhile is up almost 18 percent, taken higher primarily by technology shares.

Will Sterling, partner at TritonPoint Wealth, says energy shares will more than pull their weight as the bull market broadens in the second half of 2024.  

“Counter to what one may think, when the public equity markets are at or near 52-week highs and breadth has been narrow, that has historically been supportive of equities as widening breadth has historically been the next leg higher,” said Sterling. “That data, coupled with attractive valuations for energy along with supportive cash return strategies make us believe that energy is positioned well for the second half.”

Sterling buys individual equities to implement his thesis and