Fuel shortage risks make investors optimistic about energy stocks

At the end of the year, electricity prices and fuel shortages are expected to rise even more. Because of this, stocks and bonds of energy companies are poised to get a boost from investors looking to make money.

MLIV Pulse surveyed portfolio managers and retail investors. Of those, two-thirds said they plan to expand their holdings in the energy sector in the next six months. They also believe that electricity and natural gas prices are driving global inflation. Shortages of major fuels are expected to emerge in the winter due to Russia's shutdown of natural gas flows.

Rising oil and gas prices have helped the energy companies' index in the S&P 500 increase by more than 40% this year. However, they remain significantly lower than their S&P 500 peers based on their prices compared to the profits they are expected to report next year. 

In a survey of 814 people, about three-quarters said the biggest impact on global inflation over the winter would come from electricity and natural gas prices. The same number of people said shortages of major fuels are most likely in the next six months.

Investor interest in energy sector stocks rather depends on the industry to which the companies belong. This conclusion can be drawn from the statements of the respondents interviewed. Most of them do not plan to increase the share of S&P 500 stocks in their portfolios.

Source: Bloomberg