According to one strategist, there is limited upside to U.S. equities going into 2016, but there's potential in the beaten down energy sector.
Dubravko Lakos-Bujas, Head of US Equity Strategy at JPMorgan, admits that while energy may be the highest risk-reward sector, he also sees it as a relative outperformer towards the end of 2016. He believes that as companies continue to struggle on the cash front, the market will see some bankruptcies and consolidations in the second or third quarter.
"At that point fundamentals start to curb the corner," says Lakos-Bujas. He adds that the sector will continue to be quite volatile throughout the year.