The financials and energy sectors offer the best growth investment opportunities for investors in the year ahead, new global research from blockchain-based derivatives trading platform CloseCross shows.
But its study among professional investors around the world responsible for around $380 billion in assets under management found widespread disagreement on which sectors offer the best and worst growth opportunities for the next 12 months.
More than half (52.5%) of investors rated the financials sector as offering the best growth opportunities while 36.6% said it offered the worst. For the energy sector around 45.5% rated it as offering strong opportunities while 27.7% said it was the worst.
Energy stocks are also back in favour this week as investors can see rising oil and gas prices feeding back into the sector globally. Stocks like Royal Dutch Shell (LSE:RDSA) and BP (LSE:BP) are getting plenty if buying volume this week. Shares in Royal Dutch Shell are up nearly 10% over the last five days as investors pile into the stock.
Royal Dutch Shell was trading at around 1436 last Monday, but queues of cars in front of UK petrol stations have prompted a rush into oil stocks. The shares are trading at 1643 at the time of writing.
The energy and banking sectors emerged with a net positive score along with Information Technology, Healthcare and Communication Services.
The study for CloseCross, which enables traders to generate profits through a simplified three clicks process, found the worst rated sectors were Consumer Staples and Utilities.
Just 4% of investors questioned said utilities offered strong opportunities while 22.8% rated it poorly compared with 14.9% rating Consumer Staples highly and 38.6% rating it badly. Other sectors in net negative territory included Materials, Real Estate, Consumer Discretionary and Industrials.
CloseCross CEO, Vaibhav Kadikar, told us: “Investors are clearly split on where the best opportunities for the year ahead are with most sectors attracting some support and all sectors seeing high levels of negativity for the year ahead. Financials and energy are the most highly regarded for positive support, but many investors are not convinced, and this applies even to sectors which are not seen as offering strong opportunities for growth.”
Part of this sentiment may stem from the fact that financial stocks are in fact still lagging behind the median in terms of post-pandemic recovery. While many sectors have bounced back since the gradual re-opening in the UK and US, banking stocks have still not achieved pre-pandemic levels. Investors can obviously see the sector has some upside still to give.
When measured against the S&P 1500 index, bank stocks still look relatively cheap. The banking group within the index is trading at a PE ratio of around the 12.5 mark. The average for the full index is 15.4.
UK banking stocks are also looking cheap. Shares in Barclays PLC (LSE:BARC), somewhat of a banking sector flagbearer for UK investors, are still at a PE ratio of just over 7, which looks incredibly cheap. Lloyds Bank shares (LSE:LLOY) look even cheaper, at 6.96. HSBC (LSE:HSBA) shares are trading at a PE of 11.67.
There are also expectations that if the Federal Reserve raises rates, banking stocks there could have more upside opportunity.