The top performing stocks of the S&P 500 index are a part of the oil and energy sector. While S&P 500 is down by over 24% in 2022, the S&P 500 Energy Sector Index has climbed 32% and 41 % over the YTD and 12-month period. The biggest gainer of the S&P 500 index is none other than the stock that even WB likes – Occidental Petroleum (OXY).
With a 114% gain in 2022, Occidental Petroleum, an American hydrocarbon exploration business, has largely benefited from the price increases and surge in demand. The recent purchases of OXY shares by Warren Buffett may have also contributed to the price surge.
The S&P 500’s greatest market winners so far this year are the energy and oil sectors, while tech firms are having trouble holding their ground. The stock price of almost all the oil companies has climbed higher in 2022. Rising commodity prices and record profits at oil and gas companies have attracted investors to the energy sector. Despite the challenges the supply system of various economies is encountering, the demand for crude oil has remained strong.
According to CMC Markets, an online trading platform, some oil and gas companies boast impressive dividend payments which could have made them increasingly attractive to shareholders. Solar panels and batteries for residential properties have been in high demand since the announcement of rising energy bills throughout Europe. Enphase Energy has experienced an extraordinary sales year so far with European sales up almost 70% in the second quarter. Upstream oil companies like ExxonMobil benefited greatly from the crude oil price hike during the first half of the year.
Currently, a tipping point has occurred in the global energy industry. Energy stocks have seen an increase in interest over the past year, but the sector has long been a favourite among investors due to supply restrictions brought on by the ongoing crisis in Ukraine and the hunt for alternative energy sources. Leading energy companies have reported substantial earnings, and the outlook for the industry is still positive.
Based on forward-year price-to-earnings (P/E) ratios, many analysts claim that energy companies are significantly less expensive than equities in other sectors. The S&P 500 experienced high single-digit earnings growth in the second quarter. However, excluding energy, profits actually decreased year over year.