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Energy stocks could pull a Tesla and go parabolic in 2021, Fundstrat's Tom Lee says

Energy stocks could pull a Tesla and go parabolic in 2021, Fundstrat's Tom Lee says


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Energy stocks could go parabolic this year and trade like Tesla did in 2020 as investors experience FOMO, Fundstrat's Tom Lee said in a note on Thursday.



The trade is playing out so far in 2021. The S&P 500 Energy Index is up 13% year-to-date, while the broader S&P 500 has climbed less than 1%.



With the sector making up just 2.5% of the S&P 500, few investors have exposure to energy stocks, according to Lee.



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Energy stocks could see a reversal in fortunes this year after a dismal showing in 2020 and stage a parabolic surge like Tesla, Fundstrat's Tom Lee said in a note on Thursday.The energy sector fell 37% in 2020 and briefly saw oil prices dip into negative territory as the COVID-19 pandemic and ensuing travel restrictions sparked a collapse in demand. Over the same time period, Tesla soared 743% as the company managed to barely miss its 500,000 full-year delivery goal by only a few hundred cars.But energy stocks are already starting to stage a rebound, with the sector up 13% year-to-date, while the broader S&P 500 has climbed less than 1%, Lee points out. On top of that, few investors have exposure to energy stocks, with the sector making up just 2.5% of the S&P 500.This is the same recipe for FOMO, or the fear of missing out, that helped drive shares of Tesla higher in 2020, according to Lee. A surge in energy stocks could drive fund manager underperformance, given that "many institutional investors have ZERO weighting in energy," Lee said.
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