As the world recovers from the pandemic and starts opening up, the energy industry is looking to become the “winner” of 2022 with a surge in demand.
You may be thinking of adding some oil and gas counters into your portfolio now in order to profit from their price run while also hedging against inflation. However, you might not be familiar with the industry and you might worry that cyclical O&G stocks can crash anytime.
My approach is to use momentum to invest in such cyclical industries. Here, I took all the O&G stocks listed in the US and ranked them according to their momentum. I present the top 10 Oil and Gas Stocks with the highest Momentum as of 20 April 2022:
Oil and Gas Stocks With the Most Momentum
| O&G Company | Ticker | Momentum | YTD return | Market Cap (M) | Price (as of 19 Apr 22) |
|---|---|---|---|---|---|
| Occidental Petroleum | OXY | 1039.55 | 94.40% | 56,571 | $60 |
| Halliburton | HAL | 459.93 | 72.20% | 37,202 | $41 |
| Woodside Petroleum | WOPEY | 370.17 | 52.35% | 23,911 | $24 |
| Canadian Natural Resources | CNQ | 312.32 | 55.54% | 77,809 | $67 |
| Targa Resources Corp | TRGP | 274.4 | 48.48% | 18,045 | $79 |
| Chevron | CVX | 245.2 | 44.08% | 334,648 | $172 |
| Equinor | EQNR | 211.99 | 42.89% | 124,379 | $38 |
| Hess Corporation | HES | 199.16 | 48.95% | 35,429 | $114 |
| Conocophillips | COP | 190.63 | 37.67% | 131,627 | $102 |
| Pioneer Natural Resources | PXD | 179.09 | 34.21% | 60,920 | $251 |
1) Occidental Petroleum (OXY)
Occidental Petroleum specialises in hydrocarbon exploration and petrochemical manufacturing in the United States, Middle East, and Latin America.
If you find its name familiar, that’s because Warren Buffett’s Berkshire Hathaway had recently announced that it have been purchasing OXY shares since 2 March and now owns 136.4M shares.
Year-to-date, they are up +94.4%:
2) Halliburton (HAL)
Founded in 1919, Halliburton Company is one of the world’s largest oilfield service involved in the exploration and production of oil and natural gas. They had wind down their Russian operations which accounts for 2% of their revenue, due to the conflict.
As of their Q1 earnings, Halliburton’s management is confident of its growth for 2022 as they set to serve a growing segment of international customers.
Year-to-date, they are up +72.2%:
3) Woodside Petroleum (WOPEY)
Woodside Petroleum is the largest independent oil and gas company in Australia. It was founded in 1954 and headquartered in Perth, Western Australia, with operations in Western Australia, the Timor Sea, and Africa. It is involved in petroleum exploration and production.
As of 22 Nov 21, Woodside has signed a binding agreement to acquire BHP’s petroleum arm, however WOPEY shareholders are due to cast their votes on 19 Mat 22.
Year-to-date, they are up +52.4%:
4) Canadian Natural Resources (CNQ)
Canadian Natural Resources Limited is one of the largest independent crude oil and natural gas producers in the world. It is headquartered and has most of its production in Canada. They have been acquiring assets consistently since 2014 and had announced their plan to buy back up to ~101M of their common shares between 11 Mar 22 to 10 Mar 23.
Year-to-date, they are up +55.5%:
5) Targa Resources Corp (TRGP)
Targa Resources is a midstream energy company which gathers, processes, transports and stores hydrocarbons in the United States. It is also a Fortune 500 company.
Year-to-date, they are up +48.5%:
6) Chevron (CVX)
Chevron Corporation is an American multinational energy corporation. which is engaged in every aspect of the oil and gas industry, including exploration, production, refining, transport and marketing, and power generation. It had provided a long-term guidance of a 3% production CAGR through 2025.
Despite the challenges of its industry, Chervon has been increasing its dividend payout for ~35 years, qualifying it as a Dividend Aristocrat which are often branded as high quality dividend stocks. At the point of writing, it has a dividend yield of 3.3%.
Year-to-date, they they are up +44.1%:
7) Equinor ASA (EQNR)
Equinor ASA is a Norwegian energy company, headquartered in Stavanger. It is a major offshore operator and the largest producer of oil and gas on the Norwegian continental shelf. The company has also expanded into renewable energy operations which makes up about 1.55% of its total revenue.
Year-to-date, they are up +42.9%:
8) Hess Corporation (HES)
Hess Corporation engages in exploration and production of crude oil, natural gas liquids and natural gas.
They had announced a 50% increase in quarterly dividend in Feb 2022. Year-to-date, they are up +48.9%:
9) ConocoPhillips (COP)
ConocoPhillips is an American multinational energy corporation which engages in hydrocarbon exploration and production. COP had exceeded earning estimates in the previous 5 quarters and is looking to continue its streak this season.
Year-to-date, they are up +37.7%:
10) Pioneer Natural Resources (PXD)
Pioneer Natural Resources Company is another company that engages in oil and gas exploration and production. It has also made it into the Fortune 500.
Year-to-date, they are up +34.2%:
Momentum could help you catch opportunities in cyclical industries
Unlike value or growth investing, momentum allows investors and traders to profit from ongoing trends. Instead of “buy low, sell high”, we’re looking to “buy high and sell higher” by riding on stocks with upward momentum.
This is perfect for cyclical industries like Oil and Gas where stocks can shoot up in a shorter period of time after being stagnant for years.
I combine value investing principles with momentum trading in order to make sure that we’re investing in stocks that are likely to hold their momentum. Although it sounds complicated, the process is rather simple – we rate stocks by their quality and momentum, rank them from top to bottom and invest only in those that make the top of the list.
If you think this could help you jump in on timely opportunities to grow your money, I’ll be sharing how you can use the QMT framework at my upcoming webinar.
