Energy is now outperforming but ‘is no longer a buy-and-hold sector,’ trader says

SectorOil & Gas
CountryMiddle east

Last year's worst is now this year's best.Energy is the top-performing sector now, up nearly 15% since Jan. 1 amid falling U.S. crude oil inventories. The group suffered a horrible 2020, losing over 37%.Though energy's long-term outlook is dimming, the sector isn't void of opportunity, Mark Tepper, president and CEO of Strategic Wealth Partners, told CNBC's "Trading Nation" on Tuesday."This is a very tricky sector," Tepper said.

"In my opinion, I think this is no longer a buy-and-hold sector. It's more of a trade. I don't care what time frame you use — three years, five years, 10 years — the energy sector has been underperforming the S&P over any of those time frames by double digits annualized."That should continue as clean energy adoption accelerates, but in the meantime, there appears to be one potentially valuable trade in the making, Tepper said."Here's the opportunity: Oil has found support. Unfortunately, it's because of a reduction in supply rather than an increase in demand. Oil's down about 3% now year over year whereas energy stocks are down about 30% year over year. So, there's definitely the possibility of a catch-up," he said."My favorite play here is Diamondback," Tepper added. "It's a pure more...