Next week for stocks: Oil is still in good shape for energy stocks

Energy stocks fell last week as Oil prices fell. But crude oil prices are still nearly 20% higher so far in 2022, making this sector one of the few bright spots in the market this year. (In fact, an oil stock with the symbol FANG, Diamondback Energy (fang)by 25%).
Two of the largest energy sector ETFs, namely SPDR Energy Sector Selection Fund (XLE) and the iShares US Energy ETF (amount)each greater than 45%.
Occidental Petroleum (OXY)a power company backed by Warren Buffett’s Berkshire Hathaway (BRKB), nearly 140% this year. This makes it the best performing stock in the market Standard & Poor’s 500. (Berkshire currently owns about 20% of Occidental, and US federal regulators recently approved Berkshire’s request. to take a 50% stake.)
Berkshire is also major investor in chevron (CVX)which is up more than 30% this year and is the highest stock in daw. And the top ten Standard & Poor’s 500 stocks are all in the oil patch, including His (His)And the ExxonMobi (XOM)Earth ConocoPhillips (policeman).
Meanwhile, the father of Facebook meta padsAnd the apple (AAPL)And the Amazon (AMZN)And the Netflix (NFLX) And the owner of Google the alphabet (The Google) All are sharply lower.
Technology isn’t the only part of the market that is swinging. Most major stocks are in the red for the year. As well as meme shares like AMC (AMC)And the bed bath behind (BBBY) And the Jim Stop (GME). Bitcoin and other cryptocurrencies have also fallen. This is why the performance of oil stocks really stands out.

Some experts believe the energy stock boom is still in its early stages, despite the big move this year.

“The oil sector has a long structural wind behind it,” said Matt Cole, head of products and investments at Strive Asset Management. “There is a shortage of supply, so there is still an upside.”

Strive has a new US energy ETF with ticker symbol DRLL. The fund is passively managed and tracks the highest index of oil stocks. Exxon Mobil, Chevron and ConocoPhillips are the biggest holdings.

Cole isn’t too concerned about the recent dip in energy prices. As long as oil costs remain high, he said, energy companies should mint money.

The big meeting of OPEC+ countries on Monday could push up crude oil prices as well. There is speculation that oil-producing countries could do so raw production parts.
Nor is Cole concerned that recent weakness in oil prices is a sign of weak demand. Price fluctuations may be more due to a The strongest dollarThis usually leads to lower commodity prices. Fears of an impending recession in the US are also fading a bit thanks to persistence Flexible job market and stability in inflationary pressures.

In other words, oil prices must remain stable. This may not be a repeat of 2008, when crude oil prices fell during the depths of the Great Recession/global financial crisis.

“I don’t need crude oil prices to go up. They just need to stay sustainable at a relatively high level and the energy companies will make huge profits,” Cole said.

To that end, analysts currently expect Exxon Mobil to post annual profit of nearly $53 billion for 2022. That’s more than double last year’s earnings. Chevron’s net income is also expected to double to $36.2 billion.

“Energy stocks remain the best bet because as long as oil prices stay above $80 a barrel, they will continue to generate record sales and profits,” Louis Navellier, Chairman of Navellier & Associates, said in a report. He also noted that stocks are trading at fairly low valuations based on earnings estimates and also a big dividend payout.

Exxon, for example, is trading at less than eight times its 2022 earnings forecast, a huge discount to the broader market. The S&P 500 is valued at about 19 times this year’s earnings forecast. Exxon also pays a dividend of about 3.8%, compared to a yield of about 3.2% for a 10-year US Treasury bond.

Cole also said that investors should definitely pay attention to the fact that Buffett has bet heavily on oil stocks lately.

“Buffett’s legacy is to find profitable companies and buy them when they are very cheap,” he said. “And I think that’s the environment for that with higher interest rates.”

Could the new iPhones give a boost to Apple’s stock?

Buffett is also a big fan of Apple. Berkshire owns more than 5.5% of the stock in the company, making it the second-largest owner of the iPhone, after mutual fund giant Vanguard.

Apple’s stock, like other technologies, has fallen this year. But the stock is down only 10%. This is a lower drop than the other FAANGs. Apple also didn’t drop as much as the Dow, S&P 500, and Nasdaq.
Here's what could drive up prices for the latest iPhones
And there may be more good news on the horizon for Apple. The company is hosting an event Wednesday which is It is widely expected to unveil its new iPhone 14.

Apple stock tends to be volatile on the day of product announcements, and often drops after the news finally comes out. But make no mistake. Investors are eager to see a new batch of phones because that would boost profits and sales for the company.

The launch of the iPhone 14 could also lead to a further increase in Apple’s profitable services division, which includes Subscriptions to things like Apple Music, iCloud, and Apple TV+. Services revenue made up nearly 25% of Apple’s total sales in its most recent quarter.

next one

Monday: US stock market closed for Labor Day; OPEC+ meeting appoints new UK Prime Minister

Tuesday: American ISM Services Index

Wednesday: Apple US Trade Balance event; American Beige Book; Chinese trade data. earnings from New (NIO) and GameStop
Thursday: Fed Chair Jerome Powell speaking at the Cato Institute; US weekly unemployment claims; European Central Bank rate decision; Japan’s GDP; earnings from R (R) And the DocuSign (DOCU)
Friday: Inflation in China EU meeting on energy crisis; earnings from hook (K)