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Move on, Big Tech: Oil may be the new FAANG.
Energy stocks fell last week. Crude oil price crashBut oil prices are still up nearly 20% into 2022, making the sector one of the few bright spots in the market this year. (Actually, FANG, an oil stock with the ticker symbol Diamondback Energy
(fang)increased by 25%).
(oxy)an energy company backed by Warren Buffett’s Berkshire Hathaway
(BRKB), up nearly 140% this year. This makes it the best performing strain to date. S&P 500(Berkshire now owns about 20% of Occidental, and U.S. federal regulators recently approved Berkshire’s request. Get 50% stake.)
Berkshire too major investor in chevron
(CVX)which is up more than 30% this year, is the top stock in the world. DowAnd the top 10 stocks in the S&P 500 are all in the oil patch, including Hess.
(XOM)l and ConocoPhillips
It’s not just the tech industry that’s in turmoil in the market. Most major stocks are in the red this year. So do memetic strains like AMC
(AMC)Bed Bath & Beyond
(Bibi) and game stop
(GME)Bitcoin and other cryptocurrencies are also falling. As such, the performance of oil stocks stands out.
Some experts believe that despite this year’s big move, the energy stock boom is still in its early stages.
“The oil sector has long structural tailwinds behind it,” said Matt Cole, head of products and investments at Strive Asset Management. We have a strong case.”
Strive has a new US Energy ETF under ticker symbol DRLLThe fund is passively managed and tracks top oil stock indices. Exxon Mobil, Chevron and ConocoPhillips are the largest holdings.
Cole isn’t too worried about the recent drop in energy prices. He said energy companies should mint money as long as oil costs continue to rise.
A big OPEC+ meeting on Monday could also boost oil prices. There is speculation that oil-producing countries can. Reduce crude oil production.
Cole is also unconcerned that the recent oil price slump is a sign of weak demand. price changes are strong dollar, which usually pushes commodity prices down. Fears of impending recession in the US have also started to wane a bit thanks to the stability. a resilient job market and Inflationary pressure leveling off.
In other words, oil prices must remain stable. This may not be a repeat of his 2008 when oil prices plummeted in the depths of the Great Recession/Global Financial Crisis.
“Oil prices don’t need to go up. They just need to be maintained at relatively high levels and energy companies can make huge profits,” said Cole.
As such, analysts now expect ExxonMobil to post an annual profit of about $53 billion in 2022. That’s more than double his profit last year. Chevron’s net profit is also expected to more than double his $36.2 billion.
“As long as oil prices stay above $80 a barrel, energy stocks are the best bet as they continue to post record sales and profits,” Louis Navellier, chairman of Navellier & Associates, said in a report. He also noted that the stock is trading at a fairly low valuation based on earnings estimates and pays out big dividends.
Exxon, for example, is trading at less than eight times its 2022 earnings projections, a significant discount to the broader market. The S&P 500 is valued at about 19 times its expected earnings this year. Exxon also pays a dividend of about 3.8%, compared to a yield of about 3.2% on his 10-year US Treasury bonds.
Cole also said investors should definitely pay attention to the fact that Buffett recently bet big on oil stocks.
“Buffett’s legacy is to find profitable companies and buy them when they’re very cheap,” he said. “And I think this is the environment for interest rates to rise. .”
Buffett is also a big fan of Apple. Berkshire owns more than 5.5% of his stake in the company, making him the second largest holder of Mutual after his fund giant Vanguard.
Apple’s stock, like other tech companies, has fallen this year. However, the stock has fallen only about 10%. This is a smaller reduction than other FAANGs. Apple also Dow, S&P 500, Nasdaq.
And for Apple, better news may be on the horizon. The company is hosting an event on Wednesday, It is widely expected to announce the new iPhone 14.
Apple’s stock price tends to fluctuate on the day of a product announcement, often dropping after the news is finally announced. But make no mistake. Investors are eagerly awaiting a new phone line-up that should boost the company’s earnings and sales.
The iPhone 14 launch could also boost Apple’s lucrative services division even further. Subscriptions to Apple Music, iCloud, Apple TV+, and more. Services sales accounted for nearly 25% of Apple’s total revenue in the latest quarter.
Monday: US stock markets are closed for Labor Day. OPEC+ meeting; new UK prime minister nominated
Tuesday: US ISM Service Index
Wednesday: Apple Events; US Trade Balance; US Beige Book; China Trade Data; Earnings from Nio
(Nio) and game stop
Friday: Chinese Inflation; EU Energy Crisis Conference;Kroger Earnings