In this article, we discuss 10 best-performing energy stocks of 2022. If you want to see more stocks in this selection, click 5 Best-Performing Energy Stocks of 2022.
The fate of energy stocks has historically been tied to oil prices. However, since the beginning of the third quarter of 2022, West Texas Intermediate crude has plunged 15% from about $106 per barrel to roughly $90 as of September 15. Meanwhile, the S&P 500 Energy Index has climbed 15% over that period, driven by 32% gains in Devon Energy Corporation (NYSE:DVN) and ConocoPhillips (NYSE:COP). While WTI is up 16% YTD, the S&P energy index has jumped 44%, making it the best performing stock market sector.
Despite weakness in crude oil, the tailwinds in the energy group are supported by robust earnings reports and soaring natural gas prices amid the Russia-Ukraine war. Bloomberg Intelligence analyst Vincent Piazza observed that the best performers in the energy groups were pure gas plays like EQT Corporation (NYSE:EQT).
The energy stocks were also buoyed by record Q2 earnings, which led to upsized special dividends and share buybacks. Similarly, energy firms did not raise capital expenditure despite crude oil topping $110, which led to strong performance even when the prices shrunk. Bloomberg cited Canoe Financial partner and senior portfolio manager, Rafi Tahmazian, who told clients recently:
“We don’t need higher oil prices for energy stocks to outperform. The industry is extremely profitable at today’s commodity prices.”
The energy sector is set to experience a boom from Europe’s growing energy crisis, countries cutting dependence on Russian oil and gas, and the increasing demand ahead of winter. Some of the best performing energy stocks of 2022 include Occidental Petroleum Corporation (NYSE:OXY), Antero Resources Corporation (NYSE:AR), and Devon Energy Corporation (NYSE:DVN).
Photo by Robin Sommer on Unsplash
Our Methodology
We selected the energy stocks that have registered notable year to date gains in share price as of September 15. The hedge fund sentiment around the securities was assessed from Insider Monkey’s Q2 2022 database of about 900 elite hedge funds.
We have ranked the list according to the YTD share price gains, from lowest to highest.
Best-Performing Energy Stocks of 2022
10. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 72
YTD Share Price Gain as of September 15: 49.29%
Exxon Mobil Corporation (NYSE:XOM) is one of the best energy performers in 2022, with the shares exhibiting a year to date return of 49.3% as of September 15. Exxon Mobil Corporation (NYSE:XOM) is a reliable dividend aristocrat, with 39 consecutive years of dividend increases under its belt. The company’s latest per share quarterly dividend of $0.88 was distributed on September 9.
Morgan Stanley analyst Devin McDermott on September 6 raised the price target on Exxon Mobil Corporation (NYSE:XOM) to $113 from $107 and kept an Overweight rating on the shares. The Inflation Reduction Act provides “attractive support for low carbon growth across CCS and hydrogen,” said the analyst, who sees larger integrated energy companies as best positioned to take advantage from a “more viable path to profitably transition toward a lower carbon business mix over time”.
According to the second quarter database of Insider Monkey, 72 hedge funds were long Exxon Mobil Corporation (NYSE:XOM), compared to 83 funds in the last quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 47.5 million shares worth $4 billion.
In addition to Occidental Petroleum Corporation (NYSE:OXY), Antero Resources Corporation (NYSE:AR), and Devon Energy Corporation (NYSE:DVN), elite hedge funds are piling into Exxon Mobil Corporation (NYSE:XOM) for exposure to the energy sector.
Here is what First Eagle Investments Global Fund has to say about Exxon Mobil Corporation (NYSE:XOM) in its Q2 2022 investor letter:
“Integrated oil and gas giant Exxon Mobil performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industry wide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”
9. Cenovus Energy Inc. (NYSE:CVE)
Number of Hedge Fund Holders: 42
YTD Share Price Gain as of September 15: 59.68%
Cenovus Energy Inc. (NYSE:CVE) is a Canadian company that develops, produces, and markets crude oil, natural gas liquids, and natural gas in Canada, the United States, and the Asia Pacific markets. Cenovus Energy (NYSE:CVE) announced on August 8 that it is acquiring BP p.l.c. (NYSE:BP)’s 50% interest in the BP-Husky Toledo Refinery in Ohio for $300 million, and will assume the right to operations from BP upon concluding of the deal. The acquisition will add 80,000 bbl/day of downstream throughput capacity for Cenovus Energy (NYSE:CVE), including 45,000 bbl/day of heavy oil refining capacity.
On September 13, Cenovus Energy Inc. (NYSE:CVE) declared a C$0.105 per share quarterly dividend, in line with previous. The dividend is payable on September 29, to shareholders of record on September 15. The stock has gained about 60% year to date as of September 15, making it one of the best performing energy firms of 2022.
On August 10, Credit Suisse analyst William Janela assumed coverage of Cenovus Energy Inc. (NYSE:CVE) with an Outperform rating and a price target of C$37.
Among the hedge funds tracked by Insider Monkey, 42 funds were bullish on Cenovus Energy (NYSE:CVE) at the end of June 2022, compared to 44 funds in the last quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the leading stakeholder of the company, with 50.3 million shares worth $957 million.
Here is what L1 Capital Long Short Fund Limited has to say about Cenovus Energy Inc. (NYSE:CVE) in its Q4 2021 investor letter:
“Detailed, bottom-up stock research remains the investment team’s primary focus and the core driver of portfolio performance. 2021 once again demonstrated the team’s ability to identify ‘winners’ through extensive company and industry research across a diverse range of sectors. Key contributors included Cenovus Energy, (due to) recovering oil price leading to improved investor sentiment, consensus earnings upgrades and strong free cash flow generation.”
8. Continental Resources, Inc. (NYSE:CLR)
Number of Hedge Fund Holders: 29
YTD Share Price Gain as of September 15: 62.68%
Continental Resources, Inc. (NYSE:CLR) is an Oklahoma-based company that develops, produces, and manages crude oil, natural gas, and related products in the United States. The company posted its Q2 results on July 28, reporting a non-GAAP EPS of $3.47, outperforming estimates by $0.28. The revenue of $2.65 billion climbed 113.7% year-over-year, but missed market consensus by $10 million. Continental Resources, Inc. (NYSE:CLR) revised multiple 2022 guidance metrics upwards, including projected ROCE, crude oil differentials per barrel of oil, DD&A per Boe, and production expense per Boe. As of September 15, the company stock has gained close to 63% year to date, earning it a place on our list of the best performing energy stocks.
Barclays analyst Jeanine Wai on August 31 lowered the price target on Continental Resources, Inc. (NYSE:CLR) to $70 from $73 and reiterated an Underweight rating on the shares. The “knee-jerk reaction” to the Alternative Minimum Tax hitting tax “safe-haven” exploration and production names is undeniably negative on an absolute basis. However, after more analysis, it’s not as bad as anticipated as the firms reaffirm their “top-tier” free cash flow yields, the analyst told investors.
According to Insider Monkey’s data, 29 hedge funds were bullish on Continental Resources, Inc. (NYSE:CLR) at the end of the second quarter of 2022, up from 20 funds in the last quarter. D E Shaw is the largest stakeholder of the company, with 1.20 million shares worth $77.5 million.
Here is what Smead Capital Management specifically said about Continental Resources, Inc. (NYSE:CLR) in its Q2 2022 investor letter:
“For the quarter, our best-performing stocks were Continental Resources, Inc. (NYSE:CLR), Merck (MRK) and Occidental Petroleum (OXY). Despite a steep sell-off in June in the oil and gas stocks, two of our oil stocks made the quarterly list. Merck’s defensive characteristics and good news on earnings/growth didn’t shock us. We argued one year ago that Merck was historically cheap relative to the indexes as compared to the last 20 years.”
7. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 71
YTD Share Price Gain as of September 15: 67.10%
ConocoPhillips (NYSE:COP) is a Texas-based company that explores, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. ConocoPhillips (NYSE:COP) produced 1.7 million barrels of oil equivalent in Q2 2022, and announced a $5 billion increase in total return of capital to shareholders in 2022, which now stands at $15 billion. The company is also expanding LNG operations with significant projects in the United States and Qatar. As of September 15, ConocoPhillips (NYSE:COP) stock has returned about 67% to stakeholders year to date.
On September 12, Piper Sandler analyst Ryan Todd raised the price target on ConocoPhillips (NYSE:COP) to $134 from $123 and maintained an Overweight rating on the shares. The analyst remains constructive on the integrated oils sector, noting that near-record distillate margins continue to generate upside in refining estimates and will likely do so through the winter and into an “equally tight” 2023.
According to Insider Monkey’s data, 71 hedge funds were long ConocoPhillips (NYSE:COP) at the end of Q2 2022, up from 67 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is the leading position holder in the company, with 6.76 million shares valued at $607.2 million.
Here is what ClearBridge Investments Large Cap Value Strategy has to say about ConocoPhillips (NYSE:COP) in its Q1 2022 investor letter:
“The energy sector, which led a strong market in 2021, generated even more dramatic relative performance in the quarter, advancing 39% and leading the benchmark Russell 1000 Value Index. Years of restrained investment in the energy sector, combined with a strong post-pandemic recovery, contributed to the higher commodity prices. The upward pressure escalated with the Russian invasion of Ukraine. Our energy holdings ConocoPhillips (NYSE:COP) benefited from higher commodity prices and was among the top contributors to first-quarter performance.”
6. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 65
YTD Share Price Gain as of September 15: 73.04%
Cheniere Energy, Inc. (NYSE:LNG) is an energy infrastructure company, primarily specializing in the liquefied natural gas businesses in the United States. On August 4, the company raised its H2 2022 outlook following a one-time $765 million payment from Chevron to terminate an old LNG import deal. Cheniere Energy, Inc. (NYSE:LNG) stock has gained 73% year to date as of September 15.
RBC Capital analyst Elvira Scotto on September 14 raised the price target on Cheniere Energy, Inc. (NYSE:LNG) to $199 from $184 and reaffirmed an Outperform rating on the shares. The company elevated shareholder returns by an amount that was “well above” her expectations, the analyst told investors, citing Cheniere Energy, Inc. (NYSE:LNG)’s robust execution, business model, and cash flow generation. She further observed that Cheniere Energy, Inc. (NYSE:LNG) remains intent on lowering debt and targets investment grade ratings across the board.
According to Insider Monkey’s data, 65 hedge funds reported owning stakes in Cheniere Energy, Inc. (NYSE:LNG) at the end of June 2022, up from 62 funds in the prior quarter. Carl Icahn’s Icahn Capital LP is the biggest stakeholder of the company, with 5.6 million shares worth $746.5 million.
Like Occidental Petroleum Corporation (NYSE:OXY), Antero Resources Corporation (NYSE:AR), and Devon Energy Corporation (NYSE:DVN), Cheniere Energy, Inc. (NYSE:LNG) is one of the best performing energy stocks of 2022.
Here is what ClearBridge Global Infrastructure Value Strategy has to say about Cheniere Energy, Inc. (NYSE:LNG) in its Q3 2021 investor letter:
“Cheniere Energy is an energy infrastructure company that owns and operates U.S. liquefied natural gas (LNG) export facilities. Strong quarterly results and the disclosure of capital allocation policies were positively received by the markets. In addition, continued supply and demand tightness in the LNG market created a favorable commodity price environment.”
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Disclosure: None. 10 Best-Performing Energy Stocks of 2022 is originally published on Insider Monkey.
