We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Thus far in 2023, crude oil futures are trading in a choppy frustrating range. That said, perspective is essential. From April 2020 to March 2022, oil prices went on one of its most breathtaking advances ever, from $6.50 to $130 a barrel. The hike in oil prices over the past few years can be attributed to several different factors, including:
· Supply & Demand Imbalances: Production cuts from OPEC and a recovering Asia Pacific economy has caused the imbalances seen today.
· Geopolitical Turmoil: The War in Ukraine and tensions between the United States and Iran are playing a factor in keeping inflating oil prices.
· Environmental Policy: A push by global governments to reduce carbon emissions is increasing the cost of production and consumption, leading to higher prices.
Have Oil Stocks Come Too Far?
The ranges in crude oil prices and oil-related stocks have shrunk dramatically over the past few months. Often, a contraction in prices leads to expansion. With that in mind, the current tug-of -war between bulls and bears will likely be resolved soon. Below are 3 reasons oil stocks are set to move higher in 2023:
1. Valuations are Reasonable: While oil prices have gone on a dramatic run over the past few years, valuations remain attractive relatively speaking. Oil giants such as Halliburton,Chevron and Exxon Mobil are trading at PE ratios well below that of the S&P 500 Index. For example, Exxon trades at ~8x earnings while the S&P 500 Index trades at 18x.
2. Earnings Surprise History: Though higher crude oil prices have meant higher earnings expectations, many oil companies are still jumping over the expectation hurdle. For example, Argentine oil producer YPF Sociedad Anonima has crushed earnings on average by an eye-popping 146.77%!
3. Institutional Conviction: On Monday, a recent SEC filing divulged that Warren Buffett’s Berkshire Hathawaysnapped up 5.8 million more shares of Occidental Petroleum. Berkshire’s total number of shares owned is around 200 million, equating to ownership of roughly 22% of the company.
Bottom Line
While oil has digested its gains thus far in 2023, several factors suggest that the run in oil stocks may not be over. First, environmental policy, geopolitical turmoil, and supply and demand imbalances are likely to remain stagnant for the foreseeable future. Secondly, strong growth, coupled with reasonable valuations and institutional backing should lead to higher prices for the remainder of 2023.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Investment Ideas feature highlights: Halliburton, Chevron, Exxon Mobil, YPF Sociedad Anonima and Occidental Petroleum
For Immediate Release
Chicago, IL – March 9, 2023 – Today, Zacks Investment Ideas feature highlights Halliburton (HAL - Free Report) , Chevron (CVX - Free Report) , Exxon Mobil (XOM - Free Report) , YPF Sociedad Anonima (YPF - Free Report) and Occidental Petroleum (OXY - Free Report) .
Can Oil Stocks Continue to Trend Higher?
Oils Breathtaking Advance
Thus far in 2023, crude oil futures are trading in a choppy frustrating range. That said, perspective is essential. From April 2020 to March 2022, oil prices went on one of its most breathtaking advances ever, from $6.50 to $130 a barrel. The hike in oil prices over the past few years can be attributed to several different factors, including:
· Supply & Demand Imbalances: Production cuts from OPEC and a recovering Asia Pacific economy has caused the imbalances seen today.
· Geopolitical Turmoil: The War in Ukraine and tensions between the United States and Iran are playing a factor in keeping inflating oil prices.
· Environmental Policy: A push by global governments to reduce carbon emissions is increasing the cost of production and consumption, leading to higher prices.
Have Oil Stocks Come Too Far?
The ranges in crude oil prices and oil-related stocks have shrunk dramatically over the past few months. Often, a contraction in prices leads to expansion. With that in mind, the current tug-of -war between bulls and bears will likely be resolved soon. Below are 3 reasons oil stocks are set to move higher in 2023:
1. Valuations are Reasonable: While oil prices have gone on a dramatic run over the past few years, valuations remain attractive relatively speaking. Oil giants such as Halliburton, Chevron and Exxon Mobil are trading at PE ratios well below that of the S&P 500 Index. For example, Exxon trades at ~8x earnings while the S&P 500 Index trades at 18x.
2. Earnings Surprise History: Though higher crude oil prices have meant higher earnings expectations, many oil companies are still jumping over the expectation hurdle. For example, Argentine oil producer YPF Sociedad Anonima has crushed earnings on average by an eye-popping 146.77%!
3. Institutional Conviction: On Monday, a recent SEC filing divulged that Warren Buffett’s Berkshire Hathawaysnapped up 5.8 million more shares of Occidental Petroleum. Berkshire’s total number of shares owned is around 200 million, equating to ownership of roughly 22% of the company.
Bottom Line
While oil has digested its gains thus far in 2023, several factors suggest that the run in oil stocks may not be over. First, environmental policy, geopolitical turmoil, and supply and demand imbalances are likely to remain stagnant for the foreseeable future. Secondly, strong growth, coupled with reasonable valuations and institutional backing should lead to higher prices for the remainder of 2023.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.