Are energy stocks the new tech over short term?

[Lsbcal]

Here is an article for today on the boom-bust cycle of commodities: https://awealthofcommonsense.com/2022/03/the-boom-bust-cycle-in-commodities/

A friend has some XOM Exxon-Mobil stock that he inherited and has held. It went way down but has done a round trip. Still over recent years it has strongly underperformed the SP500.

XOM is one of the largest holdings in XLE (Energy Select Fund) which also holds stocks like Chevron and ConocoPhillips. Here is a short look at how XLE (Energy Select Fund) has done over 1 year:

VDE (Vanguard Energy ETF) has a dividend yield of 2.7% and has performed similarly to XLE. This article about Goldman-Sachs suggests looking at high dividend areas of the market: https://finance.yahoo.com/news/how-investors-can-outperform-the-market-amid-russia-ukraine-crisis-goldman-sachs-120119416.html?.tsrc=372


Makes me wonder if this has a lot further to go? Looks tempting as a short term holding.

 

[NW-Bound]

The stocks I have that outperform the S&P extend further than the energy sector. The natural resource stocks that do well include metal and fertilizer mining, and agricultural products.

These stocks help reduce my loss YTD to -4%, vs. the S&P -9%. My current stock AA is 74%.

I have held the above stocks for a few years. My 2021 return was around 27%, vs. the S&P 28.7%, and my stock AA was never 100%.

At this point, I don't know about buying more, but I have held off on selling OTM covered calls on them. I would have lost these shares for sure through option assignments. Alcoa (AA) recently jumped 10% in a day.

 

[MichealKnight]

Cvx/xom

I've owned CVX/XOM , XLE since oh, 6 months after Covid started (I'm guessing). I remember buying when Covid began. Then those stocks went down even more, I panicked, and listened to the media, from their Bubble say how oil is uninvestable, etc. Shortly after that I realized, that oil is anything but uninvestable so I re-bought.

Anyways, I was very happy with the price appreciation. I sold 80% of the shares within the last 5 days. Sold CVX $172. Sold XOM at $88. Could they still go higher? SURE - it's a real product, used by real people, made by real workers, that generates real profits, and real cash. I sold only because I was taking a nice profit, AND - I have also concluded, that people - are controlled and owned by the media. Be it their Sheeple cable network of choice, blog, social media, heck even the Weather Channel. You'll have the Moms all saying "wintery mix!!!" - which is code for snow and rain....but now its a "wintery mix". "BomboCyclone whatever!" the weather apps tell them and they parrot it. Even now, people are dismayed that a war just won't resolve itself in a day - never mind that previous wars took years.

I feel that the government, even though we are "principled" and we *won't* do business with some countries will have no qualms buying from Venezuela. The same people who won't by Russia oil or go to certain fast food chicken chains, will be fine with Iranian oil - never mind that people get executed for sexual orientation. Why? Because the media didn't tell them to be mad about it.

Point being, "Iranian oil coming to market!!!" "Saudis agree to pump more!!!" - that would be the headline ,and of course, the people will look at their little phones and decide oh my god the oil prices are gonna fall, sell.

So for that reason I sold 80% last week.

If I miss upside, fine. I've put in orders for CVX at 155 and XOM at 79.

But I am firmly resolved - people, even powerful people - are controlled by the media in what they do, say, think, eat, and believe.

 

[MichealKnight]

Wow, CVX is showing $160 pre-market. I just adjusted my price down to $155 CVX and $73 XOM.

 

[NW-Bound]

^^^ Less than 3 weeks later, XOM closed at $83 on Fri 4/1, and CVX at $164.

I just saw the following article saying how Buffett has been loading up on energy stocks, despite their rise in price. Obviously, Buffett believes they have further to climb.

https://www.yahoo.com/now/why-buffett-buying-energy-stocks-230000152.html

Oil shortage causes more pain than just hitting motorists' pocketbook. It may cause a worldwide recession, as oil and natural gas are used to make many things. For example, natural gas is used to make nitrogen fertilizer, although natural gas contains no nitrogen and that has to come from the air.

 

[BeachOrCity]

If people keep their politics out of their investing decisions and just look at
valuations current vs historic,
Supply situation and elasticity
Demand situation and elasticity

All things point broadly to commodities and energy in particular. You MUST due some DD, can't just target the sector. there are lots of smaller names where pricing made "no sense" and has generated huge returns for shareholders.

If oil / natural gas remain elevated (and by elevated I only mean $80 barrell or more, some of these companies are money printing machines. To date there has not been enough capital to create an oversupply situation, and nothing (to date) has crushed demand. If either of these changes the bottom could fall out. But there are still opty's to buy for just 3-4x forward cash-flow at current pricing.

 

[Montecfo]

I had zero o&g in my individual stock portfolio, which comprises about 80% of my equity portfolio.

In March of 2021 I moved heavily into mostly independent o&g producers: APA, MTDR, FANG, EOG, COP. I also initially bought OXY but have since sold it, and pipeline co WMB. I bought these as an intermediate trade. They have done extremely well and looking like longer term trades.

I also bought some primary gas producers in the fall, just on gas inventories headed into winter. Those worked out but have sold all but EQNR which is leveraged more to European gas prices. Should have held them all but bought as a short term trade, achieved my objective.

Of course if I had to do it again I would have bought more but these have been very valuable holdings in a market on transition.

They are not really the new tech as this is all commodity pricing spec and their growth is limited in that regard.