It’s Not Bad News for All Energy Stocks

May 14, 2020 | Nicole Johnson-Barnes, CFA, Senior Research Analyst, Global Equities

With the steady stream of negative economic data, record-shattering unemployment figures, and ballooning government deficits, it has been hard to reconcile whether there is light at the end of the COVID-19 tunnel. This is coupled with the markets’ shrug-off of these gloomy figures, thus far, as we see daily green-shoots. The general expectation that we have a tough slog ahead until a vaccine is widely available has led some investors to “wait it out” on the sidelines.

This week’s chart brings attention to a flickering bright spot for investors, society, and the planet at large: the resiliency and relative outperformance of clean energy during this pandemic. The energy sector has been rocked by limited demand (due to the broad economic shutdown) and an oversupply of crude oil (caused by OPEC and Russia locking horns on price). And as shown, the global energy sector has careened downward, posting a YTD return of -37.1% through May 12th. However, if we include only those companies that embrace alternative energy, one can see that they not only have outperformed their oil-dependent peers but have also outpaced the broader market, posting -5.1% YTD return. These renewable energy and infrastructure producers are benefitting from increased demand, technological innovation, lower cost of capital, and potential expansion of tax credits (for wind and solar power), while not having their chief input dictated by oil price fluctuations.

While it would be irrational to believe that the world will unanimously cut oil consumption and usage immediately post pandemic, there are compelling arguments that our “new normal” will be more accepting of electric grid expansion and increased usage of renewable energy sources. In the U.S., we are likely still in the early innings of a multi-decade energy disruption, while developed countries within Europe and Canada are approaching the seventh inning stretch. The clean energy sector, which has been touted by the environmentally conscious crowd for years, is showing a level of resiliency that all investors should take note of.

Print PDF > It’s Not Bad News for All Energy Stocks


The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Nicole Johnson-Barnes, CFA
Senior Research Analyst, Global Equities

Get to Know Nicole

Related Content

Column chart showing survey results by percentage of respondents. Chart subtitle: Market professionals respond: "How much do you agree or disagree with the following statement? Currently, there are many bubbles in financial markets." Chart description: Y-axis shows % of respondents ranging from 0-60%. X-axis shows columns by "Strongly agree, Slightly agree, Neither agree or disagree, Slightly disagree, and Strongly disagree." 37% strongly agree, 52% slightly agree, 5% neither, 6% slightly disagree, and 1% strongly disagree. Chart source: dbDIG Survey, Deutsche Bank Research. Data was released this week.


Bubble, Bubble, Toil, and Trouble

In Shakespeare’s Scottish play Macbeth, three witches prophesize the protagonist’s imminent rise and fall. This week, Deutsche Bank released its…


2021 Market Preview

2020 was a year like no other and has left investors across the world wondering what the future looks like….

Graphic of darkened photo of city buildings, with guidance pattern overlay and "2021 Market Preview" in white.


2021 Market Preview Video

This video coincides with our 2021 Market Preview newsletters and provides a high-level summary of each,…

Chart subtitle: Projected GDP growth rates across the globe more optimistic heading into the year. Chart description: Bar chart showing Annual GDP Growth Rate on y-axis, with 2019 Actual, 2020 Projection, and 2021 Projection for (x-axis) World, United States, European Union, United Kingdom, Germany, Japan, Emerging Markets, China, and India. All categories show positive for 2019 and 2021 projection; all categories except China negative for 2020 projection. Chart source: IMF.


Glass Half Full?

As we are beginning to see a possible finish line on the COVID-19 front, there is an expectation in the…


Tech Bubble Revisited? Contrasting the Current Landscape with the Dot-Com Boom and Bust

Continued strong performance of technology-oriented stocks through disparate economic environments, elevated valuations, and increasing concentration within the growth space have…

Line chart showing M2 Money Stock in teal and Velocity of M2 Money Stock in green. Chart subtitle: M2 continues to grow while money velocity dips. Chart description: Left Y-axis shows $ in billions, ranging from 0-$20,000. Right Y-axis shows Velocity from 0.0-2.5. X-axis shows time since January 2000, through August 2020. Recessions are marked by shaded grey bars, denoting the dot-com bubble in the early 2000s, the Global Financial Crisis in 2008, and the current recession which began in March 2020. M2 Money Stock line begins near $4,000 in January 2000 and is currently near $19,000. Velocity line begins near 2.0 in January 2000 and is currently near 1.2. The two lines converged around October 2015. Recently the M2 Money Stock has climbed sharply and Velocity dipped significantly in 2020 but most recently slightly grew. Chart source: Federal Reserve Bank of St. Louis as of December 31, 2020.


Is Velocity Stifling Inflation Amid Record Growth of Money Supply?

Inflation has remained well below 3% in the United States for nearly a decade despite a record economic expansion and…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >