Offshore oil drillers were about the worst place to be in 2020 as oil prices were falling and demand for crude seemed to be seeping away. Now, the stocks may be the ones to own as investors realize that oil will be needed to make the world go around for decades.
Tag: Natural Gas/Oil Exploration
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These 20 stocks were the biggest winners of 2022
Even during a year in which the S&P 500 index declined 19%, with 72% of its stocks in the red, there were plenty of winners.
Before showing you the list of the best performers in the benchmark index, let’s look at a preview: Here’s how the 11 sectors of the S&P 500
SPX,
-0.25%
performed for the year:Index 2022 price change Forward P/E Forward P/E as of Dec. 31, 2021 Energy 59.0% 9.7 11.1 Utilities -1.4% 18.9 20.4 Consumer Staples -3.2% 21.0 21.8 Health Care -3.6% 17.6 17.2 Industrials -7.1% 18.3 20.8 Financials -12.4% 11.9 14.6 Materials -14.1% 15.8 16.6 Real Estate -28.4% 16.5 24.2 Information Technology -28.9% 20.1 28.1 Consumer Discretionary -37.6% 21.3 33.2 Communication Services -40.4% 14.3 20.8 S&P 500 -19.4% 16.8 21.4 Source: FactSet Maybe you aren’t surprised to see that the energy sector was the only one to increase during 2022. But it might surprise you to see that despite the sector’s weighted price increase of 59%, its forward price-to-earnings ratio declined and remains very low relative to all other sectors.
It might also surprise you that West Texas Intermediate crude oil
CL.1,
+2.69%
gave up most of its gains from earlier in the year:
FactSet
The reason investors are still confident in energy stocks is that oil producers have remained cautious when it comes to capital spending. They don’t want to increase supply enough to cause prices to crash, as they did in the run-up to the summer of 2014, after which prices fell steadily through early 2016, causing bankruptcies and consolidation in the industry.
Now the oil companies are focusing on maintaining supply, raising dividends and buying back shares, as Occidental Petroleum Corp.’s
OXY,
+1.14%
chief executive explained in a recent interview with Matt Peterson. Click here for more about Occidental and the long-term supply/demand outlook for oil.Best-performing S&P 500 stocks of 2022
Here are the 20 stocks in the benchmark index that rose most during 2022, excluding dividends. Proving that there are always exceptions, not all of them are in the energy sector.
Company Ticker Sector Industry 2022 price change Occidental Petroleum Corp. OXY,
+1.14% Energy Oil & Gas Production 117.3% Hess Corp. HES,
+0.68% Energy Oil & Gas Production 91.6% Marathon Petroleum Corp. MPC,
+0.18% Energy Oil Refining/ Marketing 81.9% Exxon Mobil Corp. XOM,
+1.01% Energy Integrated Oil 80.3% Schlumberger Ltd. SLB,
+1.04% Energy Contract Drilling 78.5% APA Corp. APA,
+1.68% Energy Integrated Oil 73.6% Halliburton Co. HAL,
+1.23% Energy Oil & Gas Production 72.1% First Solar Inc. FSLR,
+0.68% Information Technology Semiconductors 71.9% Valero Energy Corp. VLO,
+0.43% Energy Oil Refining/ Marketing 68.9% Marathon Oil Corp. MRO,
+1.08% Energy Oil & Gas Production 64.9% ConocoPhillips COP,
+1.38% Energy Oil & Gas Production 63.5% Steel Dynamics Inc. STLD,
-0.72% Materials Steel 57.4% EQT Corp. EQT,
-0.12% Energy Oil & Gas Production 55.1% Chevron Corp. CVX,
+0.66% Energy Integrated Oil 53.0% McKesson Corp. MCK,
Health Care Medical Distributors 50.9% Cardinal Health Inc. CAH,
-0.46% Health Care Medical Distributors 49.3% EOG Resources Inc. EOG,
+0.69% Energy Oil & Gas Production 45.8% Enphase Energy Inc. ENPH,
-0.20% Information Technology Semiconductors 44.8% Merck & Co. Inc. MRK,
+0.12% Health Care Pharmaceuticals 44.8% Cigna Corp. CI,
+0.19% Health Care Managed Health Care 44.3% Source: FactSet Click on the tickers for more information about the companies.
Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
Don’t Miss: These 20 stocks were the biggest losers of 2022
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U.K. fracking stocks slump after Sunak reinstates ban
Shares in London-listed fracking companies slumped on Wednesday after new U.K. Prime Minister Rishi Sunak said he would stick by his party’s manifesto pledge to ban the shale gas extraction process in Britain.
IGas Energy stock
IGAS,
-27.66%
dropped 28% and the equity of Egdon Resources
EDR,
-18.21%
slumped 11%. The shares of AJ Lucas
AJL,
+2.99% ,
which owns nearly 50% of U.K. fracker Cuadrilla, are quoted on the Australian stock exchange, which was closed.The fracking sector is tiny in the U.K. — the two U.K.-quoted companies have a combined valuation of less than £60 million — with few suitable sites for the process to be viable.
But the industry’s practices are highly controversial, with campaigners arguing it causes small earth tremors, pollutes water tables and is not compatible with lower carbon production targets.
The shares of IGas Energy had jumped around ninefold since the start of the year, getting an extra recent boost from previous Prime Minister Liz Truss’s decision to go against the Conservative Party’s wishes and allow fracking.
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A Tesla stock plunge could destroy ‘zombie stocks’ such as GameStop and Peloton, warns equity research firm New Constructs
Tesla shares could decline dramatically — and that could mean disaster for a number of stocks that have already seen deep share-price cuts, according to equity research firm New Constructs.
The research firm, which uses machine learning and natural language processing to parse corporate filings and model economic earnings, called the stocks in danger “zombie stocks,” and defined them as companies with poor business models that are burning cash at an alarming rate and are at risk of seeing their stock decline to $0 per share.
The research firm estimates there could be some 300 zombie companies across the marketplace.
“The Federal Reserve’s aggressive rate hikes so far in 2022 have ended the era of free money and exposed a worrisome dynamic throughout capital markets: zombie stocks,” wrote New Constructs CEO David Trainer, in a note.
See Now: Tesla earnings are coming, but do record deliveries mask a demand problem?
New Constructs does not define Tesla Inc.
TSLA,
+7.01%
as a “zombie stock,” citing CEO Elon Musk’s ability to raise capital, but does see the electric car manufacturer as a bellwether for the sector. “It shares many of the common characteristics of a zombie stock, such as an outrageous valuation and high cash burn,” wrote Trainer. “We believe Tesla’s unrelenting share price rise over the past three years – where investors completely ignored company fundamentals – inspired the birth of many of today’s zombie stocks.”Tesla reports its third-quarter results after the closing bell on Oct. 19.
The company’s stock was trading around $220 on Monday, an increase of over 1,000% compared to three years ago. But Trainer feels that Tesla is at risk of falling more than 80% to $25 a share.
Tesla’s Optimus bot: ‘High school science project’ or robotics game changer?
Tesla’s stock has fallen 37.6% in 2022, outpacing the S&P 500 Index’s
SPX,
+2.65%
decline of 22.7%.“Its valuation remains nosebleed high because the cash flow expectations baked into the stock price are unreasonably optimistic,” Trainer wrote. “Our message to investors is to take profits in Tesla and avoid zombie stocks at all costs.”
New Constructs recently added cloud-based communication company RingCentral Inc.
RNG,
+6.49%
to its list of “zombie” stocks. Other companies on the list are Freshpet Inc.
FRPT,
-2.03% ,
Peloton Interactive Inc.
PTON,
+7.04% ,
Carvana Co.
CVNA,
+6.30% ,
Snap Inc.
SNAP,
+6.01% ,
Beyond Meat Inc.
BYND,
+0.64% ,
Rivian Automotive Inc.
RIVN,
+6.93% ,
DoorDash Inc.
DASH,
+6.15% ,
Shake Shack Inc.
SHAK,
+4.01% ,
Chewy Inc.
CHWY,
+10.76% ,
Uber Technologies Inc.
UBER,
+4.98% ,
Robinhood Markets Inc.
HOOD,
+3.24% ,
Tilray Brands Inc.
TLRY,
+7.32% ,
Affirm Holdings Inc.
AFRM,
+6.72% ,
SunRun Inc.
RUN,
+1.70% ,
Blue Apron Holdings Inc.
APRN,
+3.26% ,
and meme stocks AMC Entertainment Holdings Inc.
AMC,
+6.00%
and GameStop Corp.
GME,
+5.40% .See Now: RingCentral added to ‘zombie’ stocks list by equity research firm New Constructs
“Investors are now fed up with these kinds of companies, especially amid this year’s stock market volatility,” wrote New Constructs’ Trainer. “If investors start to give up on Tesla and take profits on the stock, which is up over 1,000% over the past three years, that spells terrible news for all of the other zombie stocks that don’t have the cash-raising luxury that Tesla has.”
