I worked with a psychologist once who taught me the concept of “my future self.”
She had me close my eyes and envision how I might feel 10 years in the future based on a decision I made that day.
Ideally, my “future self” looks back and thinks, “Wow, I did myself a huge favor with that move…”
It can be a little thing…
Like how I prep my espresso-maker each evening, so when I’m barely awake and juggling my 2-year-old son the next morning, all I have to do is switch the stove on and my coffee starts brewing.
But you can also do your future self BIG favors…
And as an investor, one of the biggest favors you can do for your future self is figuring out which companies will absolutely dominate over the next 10 years…
I have a pretty strong hunch which companies will dominate the current decade. If you’ve been investing the last decade, you might have your own hunch in mind.
But I hate to break it to you…
If you’re thinking that the same tech stocks will repeat the last 10 years of domination … history is not on your side.
I’ll show you why in a minute, and how three factors have converged to make the most bullish sector in the market ALSO one of the cheapest.
For the full story, I encourage you to tune into my upcoming presentation. It’s less than a week away!
And until then, read on to learn where you should be buying stocks hand over fist right now…
A Major Shift Is Underway
Over the past five decades, investors have faced a handful of major shifts.
These shifts have come along about once every 10 years. They usher out the “old guard” and make way for new market leaders.
The easiest way to see these major shifts is to look at the 10 largest companies at the end of each decade.
(Click here to view larger image.)
Source: GavekalResearch
Allow me to break it down…
- High inflation, interest rate hikes and supply shortages in oil dominated the 1970s. By 1980, 6 of the world’s 10 largest companies were oil companies.
- The 1980s was the heyday of the Japanese economy. By 1990, 8 of the world’s 10 largest companies were Japanese.
- The 1990s was all about the promise of the internet. By 2000, 7 of the world’s 10 largest companies were technology or telecom companies.
- China’s massive buildout of infrastructure and production capacity led the 2000s. By 2010, 7 of the world’s 10 largest companies were either resource companies or Chinese banks that funded the boom.
- And of course … U.S. “Big Tech” companies were the huge winners over the last 10 years. By 2021, 9 of the world’s 10 largest companies were Big Tech companies … 8 of them based in the U.S.
Note that the group of market leaders from one decade rarely repeats that performance the following decade.
Another thing to note is that bear markets — like we’re in now have historically been the catalyst of major shifts in market leadership.
The 2000 to 2002 bear market took dot-com companies to the woodshed and ushered in the era of China’s construction boom.
The 2008 Great Financial Crisis put a lid on China’s resource consumption and sowed the seeds of an era when cheap money fueled the winner-takes-all business models of Apple, Microsoft, Google, Facebook and the like.
But now, the 2022 bear market is sending a “game over” signal to the most lucrative decade for Big Tech. Consider this…
The bear market has so far wiped out a massive $11.7 trillion of market cap from U.S. stocks. Just six stocks account for $5 trillion of that destruction:
- Apple (AAPL)
- Microsoft (MSFT)
- Amazon (AMZN)
- Alphabet (GOOGL)
- Meta (META) — formerly Facebook (FB)
- Tesla (TSLA)
If that isn’t a clear message of Big Tech’s heyday drawing to a close, then I don’t know what is!
I’m not saying all of these companies will go bankrupt next year. They won’t!
But these Big Tech stocks are now clearly out of favor … and they’re still not a good “value.”
Meanwhile, energy stocks are the exact opposite.
Let me show you what I mean using three of the factors of my proprietary Stock Power Ratings system…
My Ratings System Shines Light on the Energy Sector
We’ll start with the “momentum” rating…
In simple terms, momentum just tells us if a stock or sector is trending higher, and at a faster rate that than its peers. All other things equal, these are the stocks or sectors we want to buy!
My stock rating system is able to assign any individual stock a momentum rating between 0 (poor) and 100 (favorable). And by taking the average momentum rating of the stocks held by each sector exchange-traded fund (ETF) … I can see which sectors have the strongest momentum right now.
Take a look:
(Click here to view larger image.)
Energy is ranked #1. That means the stocks in XLE are trending higher, and at a faster rate than any other sector ETF.
“But wait,” you might say, “Doesn’t that make them expensive now?”
Well, consider this…
Energy is also the cheapest sector in the market right now.
In simple terms, “value” just tells us the market price an investor must pay to have claim to $1 of a company’s earnings … or sales, or cash flow.
Here’s a look at how the sectors rank on value right now:
(Click here to view larger image.)
Once again, energy is ranked #1. The stocks in XLE are currently trading at lower valuations than all other sectors.
That means you still have time to get in at a good price!
“But wait,” you might say, “Maybe oil stocks are cheap because there’s no growth there.”
And that’s where I really call foul!
Over the years, too many investors bought the story that tech = growth, and everything else is slowing, contracting or on its way out altogether.
The energy sector was a prime target for this idea. New, innovative technologies are pushing forward the so-called “renewable” or “clean” energy revolution.
That part of the story is true. There is a clean energy revolution underway — and I’m bullish on that mega trend.
But it’s going to take a lot longer than most people think … and traditional, “dirty” oil and gas stocks won’t be obsolete anytime soon.
Just look at my data…
In simple terms, “growth” just tells us the rate at which a company is increasing its revenues, earnings and free cash flows. All other things equal, you want to buy the stocks of companies that are growing faster than their peers at a sustainable rate.
Here’s a look at how the sectors rank on growth today:
(Click here to view larger image.)
Here again, energy is ranked #1!
Energy companies are growing revenues, profits and cash flows at a faster rate than every other sector.
The technology sector is on its heels — which is no surprise considering years of tech dominance. But looking ahead, you have to wonder if the technology sector’s growth is sustainableor not … and whether it’s at the tail end of one of the best eras for the sector.
So now, it’s time to ask:
“In ten years, will I be glad that I bought the energy sector with its strong momentum, growth, and high value…
Or …
Would I have rather bought the overvalued, downtrending tech sector… with its growth prospects potentially in peril?
I think you’d be doing your future self a big favor putting money to work in energy stocks. It’s sporting a “Golden Trifecta” of factors that make it an easy recommendation today.
I believe energy will dominate the global top 10 list of the biggest and most lucrative companies by the end of decade.
In fact, I’m so confident a new “Super Bull” in oil is just getting underway, I recently picked out three stocks that might just grace the top 10 come 2030.
To learn how you can get access to my list, along with all my research on oil, renewables and everything else, be sure to join me at 4 p.m. ET on December 28.
Until next time!
To good profits,
Adam O’Dell
Chief Investment Strategist, Money & Markets
P.S. Spotting and investing in long-term trends is never a bad idea. But for the time in between, I’ve also been known to do some short-term trading.
Every Monday, I send a small group of subscribers a handful of uncorrelated options ideas… with the goal of getting out on Wednesdays with 100% gains or more.
I call it “Wednesday Windfalls,” and for good reason. See what it’s capable of right here.
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