KJ Sullivan
The Energy Select Sector SPDR® Fund ETF (NYSEARCA:XLE) has been stuck in a rut below $101 for a decade. In 2008, it traded up to $91. Today it is trading at $83. This article looks at why this doesn't look like it will be changing.
XLE: Bottoming Out But No Breakout This Year
Summary
- XLE has underperformed for a decade, with stagnant price action and sector earnings peaking in 2022.
- The dividend yield is attractive, but price gains are lacking, and risk-adjusted returns are poor compared to the S&P 500.
- Oil prices may have bottomed, offering near-term stability, but the medium-term upside for XLE remains limited due to a weak outlook.
- I rate XLE a weak buy for the near-term, but only a hold for the medium term as risks outweigh potential rewards.
My approach is long-term and I focus on investing in macro ideas through low risk ETFs and CEFs. I have traded stocks and currencies for nearly ten years and currently run a family fund with my partner and fellow SA contributor Andrew McElroy. I also invest in real estate and am a freelance writer and contributor to Matrixtrade.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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