Stock Picks
We need Power! Portfolio power is what we got with the energy sector for the first half of the year, which has delivered exceptional returns for our EasyVSTRs during these troubled times.
The first half of the year has been undoubtingly favoring the energy sectors as the Russia-Ukraine conflict drove energy prices and stocks through the roof. Here are 2 of the best S&P 500 energy sector performers in our EasyUSD wallet:
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Occidental Petroleum (OXY)
Insider purchases excel, and who can argue with Warren Buffett when it comes to picking the cream of the crop regarding value investing. Along with its subsidiaries, Occidental Petroleum engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, Africa, and Latin America.
The recent fluctuation in the oil price has insiders at Occidental Petroleum purchasing over 17 million shares during this quarter alone. Still, the most significant transaction came from the Oracle of Omaha. Berkshire Hathaway, a key shareholder of Occidental Petroleum, also got into the action and purchased an additional 9.9 million shares for around $584 million.
The energy company’s share price has increased over 100% YTD, and if Buffett's pick is correct like he usually is when identifying value, this could be one to watch for further upside during the year.
Exxon Mobil Corporation (XOM)
Exxon Mobil is another energy sector stock that has benefitted from rising oil prices during the first half of the year, and there might be more instore. The integrated oil giant’s share price is up over 43% YTD leaving behind a very challenging decade of volatile oil prices.
The energy company operates across various aspects of the energy industry, including upstream operations like drilling and exploration and downstream operations like refining. Over the last decade, ExxonMobil has steadily curbed costs and increased efficiency, which has seen profits skyrocket with higher oil prices. Despite its challenging decade, the share price is still up over 10%, and its ability to continue to be a dividend stalwart should be noted. ExxonMobil has been paying and raising its dividend for 39 consecutive years, and with a 4% dividend yield, it should be on any dividend investor's radar.
Exxon Mobil’s resilience to endure economic hardships and the ability to restore its balance sheet should see it seize opportunities over the long term and take on the next economic cycle.
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Oil Market Roundup
Energy prices have been soaring in 2022 mainly due to several factors described by Matthew DiLallo: Years of underinvestment in developing new oil and gas resources, made worse by the pandemic, left the world short of supply. On top of that, Russia invaded Ukraine, causing global governments to sanction one of the world's leading oil and gas producers, further impacting supply. This supply shock came amid soaring demand as pandemic-related restrictions rolled off, giving people more freedom to travel.
Also, concerns are creeping back in as supply concerns, production cuts weigh in on the market, and recession fears could slow demand for oil. Florence Tan from BusinessDay reports Oil output will be cut by as much as 130,000 barrels a day from Wednesday, the country’s oil and gas association forecast on Sunday. According to a Reuters calculation, that would equal about 6.5% of Norway's production. Data showing improving activity in the services sectors of the economies of Japan and China, among the world’s biggest oil importers, provided some support for prices on Tuesday.
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Sources – EasyResearch, Reuters, Bloomberg, Koyfin, Occidental Petroleum, Vishesh Raisinghani, Bankrate, BusinessDay, SeekingAlpha, Justin Pope, Florence Tan, Exxon Mobil Corporation.
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Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.
