Buy GSXEOCAP as Security of Supply Trade

This report advocates for a 'Security of Supply' investment theme for 2026, specifically recommending long positions in oil capex beneficiaries (GSXEOCAP) and global critical materials (GSXGCRIM).

Key Takeaways

• 1.Security of supply is the core investment theme for 2026, driven by geopolitical fragmentation and trade disruptions.
• 2.The GSXEOCAP basket (Oil Capex Beneficiaries) is a top trade idea due to an expected oil capex upcycle and cheap valuation at 14.7x forward PE.
• 3.Structural tailwinds exist for Critical Raw Materials (GSXGCRIM) driven by demand from AI, defense, and the energy transition.

Table of Contents

• Buy GSXEOCAP to play upcoming oil capex upcycle
• Our Oil Capex Beneficiaries have outperformed the market since the start of the Iran war and are now breaking out vs the Big Oils trade
• GSXEOCAP rally has been supported by strongly positive earnings revisions (+12pp YTD) and a pick-up in earnings revision breath
• Despite the YTD re-rating, a 14.7x fwd PE multiple screens cheap vs history and the strong EPS outlook
• Gain global exposure to critical materials production & refining via GSXGCRIM
• Our Global Critical Materials (GSXGCRIM) basket has lagged the strong (but volatile) rally in Global Rare Earths (GSXGRARE)
• The forward earnings outlook for critical materials remains robust, with +25-40pp positive revisions across several materials baskets
• Still Structurally bullish the Power Up Europe theme (GSXEPOWR)

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