Profits on the oil stock market are refined in the crisis


The increase in international oil prices is boosting the shares of companies in the energy sector, which this year have taken advantage on Wall Street over the large technology issuers, which used to be among the “favorites” of investors.

The good performance of the sector is reflected in the 50.33% growth that the S&P 500 Energy index has accumulated in 2022, which is made up of 21 companies included in the S&P 500. On the contrary, the FANG+ index, with the 10 companies most liquid of technology, maintains a fall of 30.54% in the year.

Stock market analysts consider that oil and gas companies are gaining importance among investors because they benefit from the increase in the prices of energy raw materials, which so far this year have reached a price of up to three digits.

The barrel of US oil West Texas Intermediate (WTI) closed this Tuesday at 113.78 dollars per barrel. At its highest peak level of this 2022, the barrel was sold at 123.70 dollars. European North Sea Brent stood at $112.83 a barrel yesterday and traded as high as $127.98 at its highest for the year.

“The energy sector has performed better this year than the technology sector for various reasons. The main factor responds to the rise in the price of energy, mainly oil, but also gasoline and natural gas, this helps companies’ profits expand,” said Jacobo Rodríguez, director of Financial Analysis at Black Wallstreet. Capital.

Investors, the specialist continued to explain, have been liquidating their positions in technology companies because their multiples were already expensive, coupled with the fact that in an environment where interest rates are rising, it is much more risky to have overvalued companies.

According to data from the Bespoke Investment Group, quoted by the CNN portal, the technology sector, despite its sharp drop this year, still represents about 28% of the S&P 500 index, while energy stocks represent just 4.4% within the benchmark. .

Fight to be the most valuable

Just last week, a public company in the energy sector, for the first time, was positioned as the most valuable in the world. It is the state-owned Saudi Aramco. However, at the close of Tuesday, Apple regained its leadership again thanks to the gain of more than 2% in the value of its papers.

The tech giant has a market value of $2.4 trillion, compared to $2.2 trillion for the Saudi oil company.

“There is no doubt that the Russian invasion of Ukraine has sent shockwaves through energy markets, sending oil prices above $130 a barrel for the first time in years. Because of this, many oil stocks are profiting from rising crude oil prices. Of course, not all oil companies will benefit to the same extent because some have more exposure to rising oil prices than their competitors,” specialists from the StockMarket.com analysis firm said in a note.

Landing in profits, the three companies that stand out within the S&P 500 Energy are Occidental Petrolum, dedicated to the exploitation of oil, whose shares have risen 134.36% in this 2022, equivalent to an increase of 36,597 million dollars in its market capitalization and a total value of 63,679 million dollars.

It is followed by Marathon Oil Corporation, the American that explores and extracts oil and natural gas, whose papers have risen 72.72%, adding to its capitalization value 7,286 million dollars, which has led it to be worth 20,070 million dollars on the Stock Market.

Third on the list is the stock of Valero Energy Corporation, a US firm that produces and markets fuels and petrochemical products, which has increased 70.5%, adding 21,553 million dollars to its market value and reaching a market capitalization of 52,261 million dollars.

Other firms such as Halliburton have rebounded 65.63%, while ExxonMobil 50.53%, Chrevron has gained 48.30% this year and ConocoPhillip 48.27 percent. Of the sample of 21 issuers, all have had double-digit returns this year.

On the contrary, the so-called “Big Techs”, which total eight, including Alphabet, Amazon Microsoft and Tesla, are moving in a bear market, with Netflix leading the losses (-68.37%) and has evaporated 182,800 million dollars at its market value. The streaming company is now worth $84.661 million, after starting January with a capitalization of $267.461 million.

Technology stocks, being growth companies, are being impacted by the increase in interest rates, global inflation that is not contained and prospects of global economic deterioration.

“Since the 2008 crisis, the sector with the best performance has been technology, and it has rebounded more rapidly when there are periods of prosperity. But when there is more volatility, you see a rotation between sectors to shift investments from growth companies to value issuers. Although with the boost that was given to clean energy, companies related to fossil fuels did not see themselves with a good perspective,” said Jacobo Rodríguez.

This Tuesday was a positive day on the stock market for the Big Techs. Shares of Nvidia rallied 5.29%, Tesla (5.14%), Amazon (4.11%), Apple (2.54%), Twitter (2.49%), Netlfix (2.17%), Alphabet (1.77%) and Meta Platforms (1.29%).

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