×

They would buy what? Analysts’ most loved sectors may surprise you

  • Analysts' "most loved" sectors are now energy, health care and technology, according to a new report from Bespoke Investment Group.
  • This may surprise some investors, as energy is the worst-performing sector year to date.

Analysts' "most loved" sectors in the market are now energy, health care and technology, according to a new report from Bespoke Investment Group that showed analysts hold more buy ratings within those sectors than any other area of the market.

While technology — the market's best-performing sector — may come as no surprise, energy is the market's worst performer as oil has plunged, and health-care stocks' performance is susceptible to swings in policy.

On the "least loved" end of the spectrum, according to the percentage of analyst buy ratings, lie telecommunication stocks, utilities and consumer staples.

Long term, the energy sector appears quite challenged, said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management.

"Oil being low is just a symptom, to me, that energy may have a little bit of mean-reversion trade, but long term, faces massive secular risks. It's just under assault from technology on every single level. And I think energy, in a lot of ways, is in a very disruptive phase right now. So from a long point of view, it's actually a very negative business to be in," he said, referring to disruptions from cleaner, "green" energy to older forms of energy going forward.

Indeed, commodities appear to be in a "secular, non-bull market," in the longer term, Oppenheimer's head of technical analysis, Ari Wald, said Wednesday on CNBC's "Trading Nation."

As a result, Wald contended, energy stocks will likely continue underperforming rising equities elsewhere in the market. Interestingly enough, the technology sector's performance relative to the energy sector (on opposite ends of analysts' buy rating spectrum) is currently breaking through 15-year resistance as technology continues to outperform.

While the technology sector is overbought, Wald said, "we think this is a secular trend that continues for a while — technology outperformance."

Interestingly, two of the sectors with the most buy ratings, energy and technology, are the two that enjoy the widest coverage by analysts.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

Read more

Connect