Energy's Fundamentals Scream Value

Patience

There have been a lot of crosscurrents in the last two weeks that have likely affected energy equity prices. The decline in commodity prices, liquidations at Refco (RFXCQ Quote), large sellers of the integrated oil providers with prints that didn't hold, concerns over economic growth and interest rates and general market malaise have all contributed to the pain heaped on energy investors.

While the economic issues are worth watching, the other issues appear more transient, and are unlikely to have an impact on longer-term fundamentals. The short-term volatility stemming from these issues could last another few days or several weeks. However, with earnings coming next week from scores of energy companies, numbers should matter. And if they do, energy stocks are going to look cheaper than they have looked in at least a year.

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