Rotate To Energy? J.P. Morgan Picks 15 Stocks To Buy For 2016

 • J.P. Morgan believes that investors should begin rotating from consumer discretionary stocks into energy stocks.
• The firm predicts that the energy sector will be a market leader in 2016.
• A combination of falling non-OPEC production and increasing supply could trigger a technical rebound in oil prices in 2016.

In a new report, J.P. Morgan analyst Dubravko Lakos-Bujas lays out the firm’s cautiously bullish stance on energy stocks heading into 2016. The report includes J.P. Morgan’s top 15 energy stock picks.
 

Time for a change in leadership
Lakos-Bujas points out that consumer discretionary stocks have outperformed energy stocks in each of the last seven years by a total of 260 percent. Macro market trends rarely have lasting endurance, and Lakos-Bujas believes that the time for a leadership change is approaching.

“Speculative positioning in Energy is already extremely short, and a reversal in technical could provide a significant lift for all assets tied to the energy complex,” he explains.

Energy upgrade
Earlier this week, J.P. Morgan upgraded the energy sector to Overweight based on the firm’s belief that energy will be a market leader in 2016. For now, Lakos-Bujas is urging investors to use dips in energy stocks to rotate from consumer discretionary stocks into energy names. J.P. Morgan predicts that falling non-OPEC supply and improving demand in late-2016 will lead to a shift in oil-related technicals.
 

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Stock picks
J.P. Morgan names the following 15 companies its top stock picks in the energy space:
Chevron Corporation CVX
Occidental Petroleum Corporation OXY
Concho Resources Inc CXO
Continental Resources, Inc. CLR
Devon Energy Corp DVN
Noble Energy, Inc. NBL
Pioneer Natural Resources PXD
Nabors Industries Ltd. NBR
Patterson-UTI Energy, Inc. PTEN
Halliburton Company HAL
Schlumberger Limited. SLB
Sunoco LP SUN
Enterprise Products Partners L.P. EPD
EQT Midstream Partners LP EQM
Macquarie Infrastructure Corp MIC

Disclosure: the author owns shares of Schlumberger and Halliburton.