David Sekera, a top strategist at Morningstar, says there is one sector that “deserves a place in everyone's portfolio” right now: energy. The firm's U.S. market strategists told CNBC's “Street Signs Asia” last week that the energy sector is trading at a 5% discount and that it “stands well, especially if we enter a further reflationary environment in the second half of 2025.” Deaf,” he said. Sekera is not alone. Sander Morris Chairman George Bull and Morgan Stanley U.S. Value Fund Portfolio Manager Aaron Dunn also weighed in on the energy sector, given President-elect Donald Trump's desire to reduce energy costs and fight inflation. I'm bullish on that. Stocks Sekara is betting on on the energy theme include Exxon Mobil and Devon Energy. Morningstar has a four-star rating on Devon Energy and says it trades at a 22% discount to fair value. Exxon Mobile has a 3-star rating and is trading at a 12% discount. Investment research firms give stocks ratings from 1 to 5 stars, with the highest ratings indicating that the stock is undervalued. “Perfect pricing'' U.S. stocks hit a new high after Trump's victory in the U.S. presidential election, but have since taken a lull. “At this point, whether you call it a Trump bump or a Trump rally, I think the race is over, according to our assessment,” Sekera said. And he expects any further gains in the short term to be “pretty limited.” “The U.S. stock market is perfectly priced at this point, so we see limited upside until earnings start to catch up with valuations, which could take at least a few quarters,” he added. Sekera said U.S. stocks are currently trading about 6% above their fair value. Against this backdrop, Morningstar maintains its “market-focused” stance on U.S. stocks, believing there are “sufficient tailwinds to overcome the headwinds we're seeing at this point,” Sekala said. . Among the headwinds he predicts are inflation levels moderating below the Federal Reserve's 2% target and further interest rate cuts in 2025. Can be mentioned. The strategist also expects long-term government bond yields to fall to average levels. The 10-year bond yield will be 3.6% in 2025 and 3.2% in 2026. On Friday, the 10-year Treasury yield was trading around 4.428%.
CHOOSE LANGUAGE
SELECT LANGUAGE BELOW
