The world stock market indices are in the doldrums. This is mostly the result of the current global scenario being fraught with various uncertainties, which include seemingly endless supply-chain pressures, the growing inflationary environment, commodity price increases, and the Russia-Ukraine conflict, to name a few.
The S&P 500 (SPX) and the tech-heavy NASDAQ 100 (NDX) have plunged, hitting bear-market territory, down over 20% and 30%, respectively, year-to-date.
Meanwhile, investors are confused, not knowing where to safely park their funds. Coming to their rescue is one of TipRanks’ most helpful tools: the TipRanks Smart Portfolio tool that helps investors make informed investment decisions.
This tool enables investors to benchmark their portfolios against Top-Performing TipRanks Portfolios. With the help of this tool, investors can compare their asset and sector allocation, dividend yield, and certain other important aspects of their portfolio against these portfolios.
The oil & gas sector has been one of the hottest sectors recently, especially after the shortage of crude oil, natural gas, and other refined products – heightened by the Russia-Ukraine conflict.
Let’s take a look at two energy stocks that are included in TipRanks’ best-performing portfolios.
ExxonMobil (XOM)
Shares of the oil and gas exploration and production company ExxonMobil have gained almost 35% over the past year, handily beating benchmark indices.
The company recently inked a deal with QatarEnergy to further develop Qatar’s North Field East project, which, by 2026, will boost Qatar’s annual LNG capacity from 77 million tons to 110 million tons. ExxonMobil has been granted a 25% interest in the joint venture.
Following the news of the deal, Credit Suisse (CS) analyst Manav Gupta upgraded ExxonMobil to Buy and increased the stock’s price target to $125 (45.96% upside potential) from $115.
While the other energy giants have been slashing their investments in the sector in recent years, Gupta brings the attention of investors to XOM’s beliefs that the world’s need for fossil fuels is here to stay and the demand will continue to rise, not subside.
He added, “Post Russia-Ukraine conflict, where we are short crude, refined products, and natural gas, we expect XOM’s differentiated growth strategy will deliver excellent returns for its investors.”
However, the rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 11 Buys and five Holds. The average ExxonMobil price target of $103.93 implies 19.5% upside potential from current levels.
Chevron (CVX)
Shares of the American multinational energy giant have outperformed the benchmark indices over the past year, gaining 39%. However, the stock is down almost 17% in the past month.
Recently, CVX has grabbed investors’ interests as it continues to make new investments and acquisitions, including two recent LNG agreements with Cheniere Energy, Inc. (LNG)
At the Hydrogen Summit held in London last month, Chevron’s management stated that Chevron is planning to invest a whopping $2.5 billion in the next 10 years to boost its hydrogen capabilities by focusing on the development of blue hydrogen.
Also, last month, Chevron further bolstered its renewable energy portfolio with the acquisition of Renewable Energy Group, one of the leading producers of renewable fuels, for $3.15 billion.
Recently, Truist Securities analyst Neal Dingmann decreased CVX’s price target to $170 (17.4% upside potential) from $181 but reiterated a Hold rating on the stock.
In a research note to investors, the analyst stated, “We continue to forecast a significant Permian production ramp that includes associated gas volumes, along with the two recent LNG agreements that should allow for higher gas netbacks than peers assuming attractive international pricing holds.”
Overall, the stock has a Moderate Buy consensus rating based on eight Buys, seven Holds, and one Sell. The average Chevron stock forecast of $178.84 implies 22.6% upside potential from current levels.
Bottom Line
The most recent decline in the energy sector presents an attractive buying opportunity for investors.
The higher overall commodity prices, especially oil and gas prices, as well as elevated refining margins, will continue to act as a tailwind for both Exxon Mobil and Chevron, which are part of TipRanks’ Top-Performing Portfolios.
The current stock price weakness, therefore, likely offers a favorable entry point to these stocks.
