This report focuses on my top picks and pans for all sector funds. I will follow this summary with a detailed report on each sector.
Finding the best ETFs is an increasingly difficult task in a world where a new ETF seems to be born every 10 seconds.
The Energy sector ranks fifth out of the ten sectors as detailed in my sector rankings for ETFs and mutual funds. It gets my Neutral rating, which is based on aggregation of ratings of 20 ETFs and 79 mutual funds in the Energy sector as of October 10, 2012.
Two of the three stocks added to our large/mid cap Most Dangerous stocks list for November are from the energy sector. Those stocks are Energy XXI (Bermuda) Ltd. (EXXI) and Superior Energy Services (SPN) – both get my very dangerous rating as do all of the Most Dangerous stocks.
All of the energy sector ETFs get a dangerous rating, which means you should sell them.
It is only a matter of time before oil and gas stocks stop moving with the price of oil and start reflecting their underlying economics.
When this happens, Baker Hughes (BHI – “very dangerous” rating) will be among the stocks that fall the hardest.
I recommend investors avoid all energy sector ETFs. There are no ETFs in the energy sector with an attractive-or-better rating from my methodology at New Constructs. None of the ETFs rank better than the S&P500.
Investors should sell all dangerous-rated energy sector ETFs. The five ETFs below are the worst-rated of all energy sector ETFs: