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If the US and Chinese economies can withstand the
weakness in Europe and the Eurozone can hold it
together then certain segments of the global stock
market have a huge upside potential. The most notable
segments are global Integrated Oil & Gas and Base Metals stocks.

Both industries are trading at extremely low valuations
and have severely underperformed global equities.
Base metals and oil stocks have traded significantly
below their mean valuations since 1997 and it
seems from their valuations that investors are pricing
in a severe global recession. If the upside risk to the
economy plays out then these two industries are excellent
bets due to the indirect leverage coming from
the balance sheets of companies within them.

 

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