An oft-quoted Wall Street axiom claims that picking winning sectors is at least as important, if not more, than selecting individual stocks. This has never rung more true than in 2022, when all five of the top-performing S&P 500 stocks are from energy-related sectors.
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In a year in which the general stock market reached bear market levels at its lows — and still remains down more than 15% year-to-date — the performance of these stocks has been nothing short of breathtaking. Although a few stocks with tiny market capitalizations scored even bigger gains, these five stocks all represent large, well-known industry leaders in the S&P 500 index.
Occidental Petroleum (OXY)
- Dec. 31, 2021 stock price: $28.99
- Dec. 6, 2022 stock price: $65.20
- $ increase: $36.21
- % increase: 125%
Occidental Petroleum is the queen bee in the S&P 500 year-to-date, surging an astonishing 125% — and that’s after a recent pullback. Occidental owes a portion of its big move to its industry. Energy-related stocks have soared in 2022 on the back of diminishing supply caused by a combination of supply chain issues and the war in Ukraine.
Occidental has also specifically benefited from its massive endorsement from Berkshire Hathaway CEO Warren Buffett, the billionaire affectionately dubbed the “Oracle of Omaha” for his investing prowess. Buffett’s Berkshire Hathaway has purchased nearly 195 million shares of the oil company and has received approval to acquire as much as 50% of its stock.
- Dec. 31, 2021 stock price: $74.03
- Dec. 6, 2022 stock price: $137.07
- $ increase: $63.04
- % increase: 85%
Hess may not be the household name that Occidental Petroleum is, but the company has a $44 billion market capitalization and is one of the largest independent global energy companies. Hess has a leading position in shale production in North Dakota, but its diverse investments include deepwater production in the Gulf of Mexico and natural gas production and supply to Peninsular Malaysia and Thailand.
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With skyrocketing energy prices in 2022, Hess was well positioned to benefit on numerous fronts.
Constellation Energy (CEG)
- Feb. 1, 2022 stock price*: $49.78 (first started trading “regular way” 2/2/22)
- Dec. 6, 2022 stock price: $90.47
- $ increase: $40.69
- % increase: 82%
Constellation Energy wasn’t even trading as of year-end 2021, but it certainly made its mark on the market in 2022. Constellation Energy was spun off from its parent company Exelon and began trading the conventional way on Feb. 2, 2022, soaring on its first day.
In addition to the tailwinds of being in the right sector in 2022, the company no doubt drew interest from “green” investors, as Constellation Energy is the largest carbon-free energy producer in the United States.
Marathon Petroleum (MPC)
- Dec. 31, 2021 stock price: $63.99
- Dec. 6, 2022 stock price: $109.82
- $ increase: $45.83
- % increase: 72%
Yet another company that was propelled to huge gains in 2022 due to rising energy prices was Marathon Petroleum. Analysts think the run isn’t over, slapping a one-year price target of $134.42 on the stock and calling it a “strong buy.”
Marathon posted huge revenue and earnings numbers in its recent Q3 earnings report, beating analyst estimates, and it also boosted forward guidance. The diversified energy company operates the nation’s largest refining system, positioning it for future gains.
- Dec. 31, 2021 stock price: $21.81
- Dec. 6, 2022 stock price: $36.84
- $ increase: $15.03
- % increase: 69%
EQT may not be the best-known name on the list, but the company is the largest producer of natural gas in the U.S. This type of huge leverage to the energy market helped propel the company’s stock to huge gains YTD in 2022.
EQT’s stock dipped a bit in September as it announced a plan to buy out THQ Appalachia I LLC and associated pipeline infrastructure for a whopping $5.2 billion. The $14.6 billion company is still considered undervalued by analysts, who have a consensus “strong buy” on the stock with an average 12-month price target of $61.92.
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