Jim O'Shaughnessy, CEO of O'Shaughnessy Asset Management says oil stocks tend to post big gains after precipitous drops in commodity prices and likes Canadian Oil Sands & BP
Straight from the 2015 Reuters global investment outlook summit on join but emotional honesty CEO and CIO's Odyssey asset management nice to see you again get to see you. You very interesting comment in this summit about energy stocks and energy prices and perhaps people might want to think again about selling off energy. Well what we did was a study of Ole oil shocks where will decline precipitously. And what we were interested in lies what happens afterwards. So as you might expect during deals shock well stocks fell off precipitously. And what happens when these dude it's become far cheaper than head and passed. Our way you trying to find good high yielding global stocks is two. Look for you financial strength. Look for earnings quality and look for good did you know it's. She asks so what happens. When this was going on. Obviously yields stocks sold off as you might expect expect them to do. But we found ourselves suddenly buying into a lot of well teams because it would finally meeting our criteria. They've gotten dramatically cheaper and had their financial strength was very strong. Earnings quality was quite. And they did it yields shot up. So it's a bit the contrary and look at the field. We also did a study of what happened after these wells box and what we found was that over 80% of the time twelve months later. Cheap energy stocks were up more than 30%. From the point you might be fine. So yes big big loop and it's basically an example. Kind of contrary and look at the marketplace. What we find is that. When others are sort of panicky in the blood is running in the streets. Not a bad time to start looking at those particular innings so what some of those acutely names that you started to buy Canadian oil sands British Petroleum. Some of the names that you might be some way. I believe that we also looking hats. Whale. And just picking up a variety of names across across this. Is their opportunity still there is still looking absolutely yes we would emerge viewers to. Take a look at some of the gains in the energy group. And we would suggest that they look for underlying factors rather then we don't want them to say hey this particular company. Look at what they're trading had in terms of PC price sales. And earnings and products that are. Make sure that they have you know good financial strength could free cash flow very important. And and then they'd be very very cheap. And have higher earnings quality witches in English. Marquee acts that doesn't like Telecom to begin. Well as a scene Telecom is sort of the scary. Sector. It's the only sectors were virtually every company. And bankrupt at some point. But right now we're finding that Telecom sector is very strong financially. Very cheap means very cheap. And is paying very active in yields. So we believe that that's another sector where yield hungry investors to have a look at. The program and it we're talking about his portfolio we called hands and it. Which use global hide it and portable. And what we're also finding is that as investors crowd into division names and US. It's great to be global because we can find a lot of bargains. Overseas that are much much cheaper. And there American car for those bargains in Europe or art market. More of those bargains are here. And I think that it is because there's an economy. People are worried about sovereign wealth risk. And sovereign debt risk rather. And we'd like to remind them is that. Many of these companies in Europe are global companies they derive more of their revenue from outside their country and from with it. So as long as they're financially strong. Have Harvard very cheap. Com and have good financial strength. We think that because they are all of those things driving a lot of revenue from outside. Their own country these are excellent opportunities to be buying at this point in time. Tim Shaughnessy great to see is good to see thinks I'm Rhonda schaffler this is writers.