While oil has been a sector Wall Street has loved to hate for the past few years, the election may be another reason to avoid traditional energy stocks.
In a recent election panel of TheStreet’s investment experts, Bob Lang, Real Money contributor and co-portfolio manager of Trifecta Stocks said demand for oil has dropped amid the stay-at-home economy triggered by the coronavirus pandemic, and he doesn’t see the situation changing any time soon. “We're not seeing much of anything from any of the OPEC countries or the non-OPEC countries saying that demand is going to be picking up around the world over the next two or three years. So could we see oil, if we flash forward two years from now, 2022, 2023, could we see oil still around $40, $42 a barrel? Absolutely,” Lang said.
Lang added that energy stocks could face further tailwinds under a Joe Biden presidency if there is a democratic sweep. “I think certainly he's [Biden] talked about not touching fracking, but we know that influences coming from the liberal side, the Democratic side, are going to probably have an effect on policy,” Lang said.
But with the major oil stocks at or near all-time lows, how does one avoid the temptation of shopping for stocks at a discount? “Listen, they may look cheap on a cash flow basis or on a balance sheet basis. But to be honest with you, if the demand isn't there, and they're not selling oil out to their distributors, it's going to be a tough road,” Lang said.
For more stock advice ahead of the election: 2020 Election and Market Volatility, TheStreet's Experts Weigh In
Latest Videos From TheStreet and Jim Cramer: