Energy is a "style orphan" too cheap to appeal to value managers and lacking the typically requisite prospects to appeal to growth managers, Fundstrat analysts said in a new note. But energy stocks are poised to serve as key drivers of value recovery in the stock market. 

"Energy is critically important sector to watch to confirm the Value 'escape velocity' thesis we believe is taking place currently," Fundstrat wrote. Energy stocks will be the poster children for increasing market value, especially if oil is recovering, with strong indicators of cheap equity relative to intrinsic value.

Oil recently moved to backwardation, which is a signal of a price recovery and a probable rally for energy stocks. At the same time, the energy sector moved above its 200-day moving average for the first time since April, Fundstrat noted.

The energy sector has trailed the MSCI World Energy Index worse than ever before since the start of the year. But in the past, dramatic U.S. energy equities underperforming global energy equities resulted in U.S. energy outperforming the S&P 500 for the next six months by 290 basis points.

As energy stocks are positioned to drive overall market value, Fundstrat wrote, there are some bottom line investments to make to best play the move. 

Fundstrat identified 11 longs, nine maturing longs, six divergents and one short based on quantitative fundamentals and technicals. 

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