![]() He doubts higher prices will simply bring back supply and push prices down again. "I don't think this excessive pessimism about the energy sector is warranted," says Mian. oil production will soon balance supply and demand, pushing oil up into the $50-$60 a barrel range by the end of 2016. Related: How Low Can Prices Go? 10 Key Changes in the Oil Marketįavorite stocks: Mian likes energy names because he believes declining U.S. "The bulk of the gains that this market had to make are behind us." "We are at the end of the bull run," he says. Market outlook: Citing issues like flagging earnings growth, Fed rate hikes and sluggish global growth, Mian expects a flat or down market in 2016. Performance: 7 percent annualized returns since March 2000. Mian also considers sector trends when selecting stocks. Style: Research Director Sheraz Mian offers a focus list of 50 stocks selected in part because they have "strong buy" ratings at Zacks, which prefers names with favorable upward revisions in earnings estimates by Wall Street analysts. He says Hersha Hospitality will benefit as hotels under renovation reopen. Chesapeake has lots of debt, but Cardiff thinks the company has enough cash flow to survive: "If oil stays at $37 a barrel for two years, they might have a hard time making it, but if not, you will have one heck of a profit."Ĭardiff also likes Hersha Hospitality Trust (HT), a real estate investment trust, or REIT, that owns and operates hotels. ![]() He also likes Chesapeake Energy (CHK), a riskier name that he believes offers more potential upside. Despite all the upheaval in the energy space, Valero has been increasing its dividend, and it delivers a 3 percent yield. refiner Valero Energy (VLO), which he thinks is cheap, with forward price-earnings ratio of 9.4. production is already falling, but it is just getting started."Ĭardiff's favorite position in energy is the U.S. But we know that is not happening because rigs are off 50 percent in the past year. "You have to keep drilling these fields to get them to keep producing. will alleviate the oil glut at some point next year. But he thinks production declines at fracked wells in the U.S. Cardiff admits it's tough to call oil prices in the short term. "Energy has already been slaughtered," he says. Economy Is Stalling OutĬardiff isn't negative on everything. (TBT) and Proshares Short 20 Plus Year Treasury (TBF). He also considers ETFs that benefit from rising interest rates to be "no-brainers." He suggests Direxion Daily 20 Plus Year Bear 3x Shares (TMV), Proshares UltraShort Lehman 20 Plus Year Treasury "I think it's a time to be very defensive and careful," he says.įavorite positions: Given this view, it's no surprise he's suggesting the ProShares UltraShort S&P 500 exchange traded fund (SDS), designed to move up twice as much as the market falls. Market outlook: Cardiff thinks stocks overall could finish lower next year, in part because of rising interest rates. Performance: 9.8 percent annualized gains since 2000, compared to 4.5 percent for the Wilshire 5000 Total Market Index, according to Hulbert Financial Digest, with better performance in down markets than most letters. Related: The 3 Biggest Winners from the Fed’s Rate Hike He also likes names that will benefit from big-picture trends like changes in Fed policy. Style: Editor Gray Cardiff favors stocks that have been battered for reasons that appear temporary. Here's a look at the 2016 outlook, and some favorite stocks, of four of the best stock letter writers, chosen based on their long-term performance as reported in the Hulbert Financial Digest’s annual Honor Roll, published in the first week of December. Think energy, dividend yield plays and companies facing specific challenges like damage from the strong dollar or "cord cutting." Still, several sectors and stocks are so beaten down right now they represent good bargains for potential outperformance next year, these market experts say. He's not alone in this view among the top letter writers. Related: Why the 8 Worst-Performing Dow Stocks Tanked in 2015 "I think the market is going to have a tough time." "I am not that bullish about the market," says Gray Cardiff, editor of Sound Advice. That's because, like the best hedge fund managers, many of these letter writers have excellent long-term records. They're rarely celebrated in the media like, say, hedge fund managers. Like Dangerfield, these letter writers don't get no respect. At least that’s the view of the market's Rodney Dangerfields, the nickname I like to give to stock newsletter writers with great records who I like to check in with for an annual forecast. For all its swings this year, the stock market ended 2015 close to where it started.
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