CFRA chief investment strategist Sam Stovall calls energy stocks a continued smart play in what he thinks will also prove a bullish year for the broader market. Stovall told CNBC’s “Power Lunch” Tuesday that historical data gives strong backing for gains in the S & P 500 this year. “A lot of people like to forecast ‘recency,’ and are thinking that 2023 is going to be exactly like 2022,” he said. Stovall countered that conventional view, however, highlighting that the market rises an average of 14% following a down year, adding that the ” January barometer ” also points to a favorable outlook for 2023. Stovall’s 2023 target for the S & P 500 is 4575, although he said that number’s “more a weather vane than a laser beam.” Fears of a recession are already reflected in market prices, Stovall said, and the market is already close to the bottom. “We’ve had nine bear markets since World War II that have been accompanied by recession. Traditionally, about four of those nine have been declines similar to what we already experienced,” the strategist said. Stovall reiterated his preference for energy stocks, saying he believes there’s upside potential for energy prices. “The energy sector is trading at a 45% discount to its average P/E over the last 23 years,” he said. Among Stovall’s energy picks: EOG Resources — The oil and gas company is up about 2% in 2023 after soaring 46% in 2022 and 78% in 2021 after expanding shale drilling operations. SLB — The world’s largest offshore drilling company, formerly Schlumberger, has rallied 6.2% in 2023, fueled by enthusiasm following China’s reopening . The stock soared 79% in 2022 and 37% in 2021.
