What analysts are buying for Christmas

Written by Michael Vass

Mortgages are in trouble, and the financial sector is reeling because of it. Enormous discounts, online sales, massive toy recalls and a recent correction place serious questions on the outcome of the 4th quarter. The chance of a Democratic Presidential candidate winning the 2008 election stands high. And whispers of a potential for a recession loom in the background.

Investors are searching left and right for a place to move their money, and there are few comfortable places to go. But there are a few choices out there. In particular is the Energy sector. A quick glance at a chart of the S&P 1500, with 10 analyst recommendations or more, shows a surprising trend. Energy is considered a buy, with 54% of these stocks holding buy recommendations.

In fact the only stock to have every analyst covering it recommend it as a buying opportunity is an energy stock. That’s a huge indication of confidence out there, as opposed to the financial sector. Financials currently have only 36% of buy ratings and lead the S&P 1500 sectors with 9% recommending sells.

Now add to this the facts that Chinese stocks have entered a bear market, Oil prices has jumped to all time highs, and the credit markets are tightening, analysts see the future as lit by the sector with the power.

As we are in the beginning of winter, and demand for heating oil, electricity for Christmas trees, and natural gas to bake and cook meals for the holidays are all current expectations for the near-term seem quite logical. It seems unlikely that usage is going to drop suddenly, thus profits running into the 1st quarter of 2008 sound reasonable.

The recent pipeline explosion at the Enbridge Inc. facility in the Midwest also seems to be a factor to help stimulate the sector over all.

So what is the perfect stock gift for investors? I have no idea, but it seems that analysts are stuffing their stockings with the Energy sector. Whether that will get them a lump of coal or a sack of cash, I doubt if even Santa knows.

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