Key points
- WTI crude oil futures rose from $70 to nearly $90 a barrel, marking a 23% increase year to date and promising gains for oil companies.
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The energy sector ETF (XLE) has outperformed the market, rising nearly 17% year to date, presenting an opportunity amid rising oil prices and geopolitical tensions.
- Both OXY and
- 5 stocks we like better than Exxon Mobil
The energy market has been in full swing this year, particularly in the crude oil sector. Witnessing a remarkable rise, WTI crude oil futures, the main benchmark of US oil prices, have risen from nearly $70 a barrel at the start of the year to nearly $90 a barrel in recent times, rising by 23% since the beginning of the year.
Such a surge bodes well for oil companies, poised to generate consistent free cash flows throughout the year. In particular, the SPDR Energy Select Sector fund New York Stock Exchange: XLE, a renowned energy sector ETF, has significantly outpaced the broader market, boasting an impressive gain of nearly 17% year to date. In recent weeks, this outperformance has intensified as the energy sector gains favor, driven by various factors, including the decline in high-growth technology stocks, rising oil prices and persistent geopolitical tensions, particularly in Middle East, with no immediate resolution in sight.
The current strength and momentum of the energy sector represents an opportune time to delve deeper into its dynamics. Capital appears to be flowing rapidly into this sector, so let’s explore three stocks worth considering as the sector reaches unprecedented heights.
3 energy stocks to consider
The energy sector ETF
The SPDR Energy Select Sector fund New York Stock Exchange: XLE aims to provide investment results that generally correspond to the price and yield performance of the Energy Select Sector Index (the Index). The index includes companies from the following sectors: oil, gas, consumer fuels and energy equipment and services.
The popular sector ETF is up nearly 17% year to date and recently emerged from a significant multi-year consolidation near $95. Breaking multi-year resistance significantly changed the momentum and trajectory of the industry.
XLE’s holdings have an overall Moderate Buy rating based on 335 analyst ratings covering 99.7% of the portfolio. The consensus aggregate price target for the ETF is $104.46, projecting an upside of 6.5%.
Several industry heavyweights are among the ETF’s top five holdings, namely Exxon Mobil, Chevron, Schlumberger, EOG Resources, and ConocoPhillips.
Occidental Petroleum Co.
Western oil NYSE: OSSI is a global oil and gas company operating in the United States, the Middle East, Africa and Colombia. It focuses on exploration, production and midstream operations. Notably, in 2021, it committed to a carbon-free future with ambitious emissions reduction targets recognized by the Transition Pathway Initiative. Following its acquisition of Anadarko Petroleum in 2019, it became the sixth-largest U.S. oil and gas producer by market capitalization. Berkshire Hathaway emerged as its largest shareholder in 2022, holding more than 26% of the shares with regulatory approval for further acquisitions.
Occidental shares have enjoyed a banner year so far, up nearly 16% and outperforming the broader market. From a technical analysis perspective, the stock has been consolidating for several years, with $77 as critical resistance. If the stock continues to rise and approaches this important level, a breakout could signal that a significant and longer-term uptrend is underway.
ExxonMobil Co.
Exxon Mobile NYSE:XOM it is the largest holding in the XLE ETF, with a weighting of 21.11%, and is the second largest oil refinery in the world in terms of its operations. The company boasts a massive market capitalization of nearly half a trillion, has a P/E ratio of 13.65, and offers a dividend yield of 3.13%.
Like the entire sector, XOM recently broke above a major resistance level, signaling strong upside momentum and overall sector strength. Now trading above previous resistance at $120, the stock is outperforming the market and its sector, up more than 21% year to date. If the stock can successfully consolidate above previous resistance, this could be the last entry opportunity before it continues its rapid rise.
Based on eighteen analyst ratings, the stock has a Moderate Buy consensus rating and price target, forecasting an upside of nearly 7%. Most recently, on April 5, analysts at Truist Financial increased their target for XOM from $140 to $146, predicting an impressive 20% upside at the time of the report.
Before you consider Exxon Mobil, you’ll want to hear this.
MarketBeat tracks daily Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Exxon Mobil wasn’t on the list.
While Exxon Mobil currently has a “Moderate Buy” rating among analysts, top analysts believe these five stocks are better buys.
View the five stocks here
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