12 Best Performing Energy Stocks in 2022
In this article, we discuss 12 best performing energy stocks in 2022. If you want to see more stocks in this selection, check out 5 Best Performing Energy Stocks in 2022.
Dan Klein, Head of Energy Pathways at S&P Global Commodity Insights, said in a report dated December 12:
"China's COVID policy is the most important fundamental factor for global demand in commodities and energy in 2023 as its demand softness due to lockdowns in 2022 was a key safety valve for oil, gas, and coal markets, while Europe scrambled to replace Russian energy. With another year of vaccinations and growing frustrations with lockdowns domestically in China, restrictions will likely ease somewhat in 2023 and imports of fossil fuels can be expected to increase again."
The S&P Global Commodity Insights Energy Outlook 2023 forecasts that China's total energy demand will climb by 3.3 million barrels of oil equivalent per day, up from almost no growth in 2022. This will account for 47% of global energy demand growth in 2023. While China's imports will potentially return to full strength, India has generated solid demand in 2022, with imports of oil and coal significantly larger year-on-year, as it has absorbed meaningful volumes of Russian supply that were previously utilized by Europe.
According to S&P Global, commodity prices will normalize in 2023 as fundamentals head towards an equilibrium. Natural gas, coal, and crude oil prices are all forecasted to be lower in 2023 as compared to 2022 levels. However, 2023 would be beneficial for refiners, and refined products are expected to be traded at high prices. Electricity prices are also set to decline, as renewables come into play and European policymakers cut dependance between natural gas and power prices. Demand for fossil fuels is set to skyrocket in 2023, which would add to the climate crisis given the high carbon dioxide emissions. The geopolitical instability, soft macroeconomic growth, and rampant inflation will continue to rattle the energy security versus energy transition debate. As the global market tries to adapt to the energy crisis with fuel substitution and alternate trade flows, the energy sector will undergo a major transformation worldwide.
To play the boom in the energy sector, investors often seek to benefit from the moves of the biggest energy firms (see 17 Biggest Energy Companies in the US) as they spearhead the energy transition movement. While some investors pile into the top energy ETFs (see 10 Best Performing Energy ETFs in 2022), others look for undervalued equities in the sector (see 12 Best Undervalued Energy Stocks To Buy). Some of the best performing energy stocks in 2022 include Occidental Petroleum Corporation (NYSE:OXY), Marathon Petroleum Corporation (NYSE:MPC), and NexTier Oilfield Solutions Inc. (NYSE:NEX).
Our Methodology
We selected the following energy stocks based on positive share price gains year-to-date as of December 27. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm. This means our list demonstrates the best performing energy stocks to buy according to hedge funds. We also discussed analyst coverage, business fundamentals, and the future share catalysts associated with these firms.
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Best Performing Energy Stocks in 2022
12. Permian Basin Royalty Trust (NYSE:PBT)
Number of Hedge Fund Holders: 4
YTD Share Price Gain as of December 27: 143.66%
Permian Basin Royalty Trust (NYSE:PBT) is a Texas-based express trust that owns overriding royalty interests in multiple oil and gas properties in the United States. On December 20, Permian Basin Royalty Trust (NYSE:PBT) declared a $0.0376 per share monthly dividend, a 53.5% decrease from its prior dividend of $0.0809. The dividend is distributable on January 17, 2023 to shareholders of record on December 30. The company has been slashing dividends since October. However, the stock climbed nearly 144% year-to-date as of December 27, which merits its inclusion in our list of the best performing energy plays of 2022.
According to Insider Monkey’s Q3 data, 4 hedge funds were long Permian Basin Royalty Trust (NYSE:PBT), with collective stakes worth $57.2 million, compared to 3 funds in the prior quarter worth $38.6 million. Murray Stahl’s Horizon Asset Management is the biggest position holder in the company, with more than 3 million shares worth $50.2 million.
Like Occidental Petroleum Corporation (NYSE:OXY), Marathon Petroleum Corporation (NYSE:MPC), and NexTier Oilfield Solutions Inc. (NYSE:NEX), Permian Basin Royalty Trust (NYSE:PBT) is one of the best performing energy stocks in 2022.
11. Precision Drilling Corporation (NYSE:PDS)
Number of Hedge Fund Holders: 13
YTD Share Price Gain as of December 27: 109.17%
Precision Drilling Corporation (NYSE:PDS) was founded in 1951 and is headquartered in Calgary, Canada. It is a drilling company that provides onshore drilling, completion, and production services to exploration and production companies in the oil, natural gas, and geothermal industries in North America and the Middle East. Precision Drilling Corporation (NYSE:PDS) is one of the best performing energy stocks this year based on year-to-date share price appreciation.
On October 27, Precision Drilling Corporation (NYSE:PDS) reported a Q3 GAAP EPS of C$2.03 and a revenue of C$429.34 million, topping Wall Street estimates by C$1.39 and C$20.3 million, respectively. Subsequent to September 30, 2022, the company was awarded four five-year drilling contracts in the Middle East, which will increase its active rig count in the region to eight rigs by the middle of 2023.
TD Securities analyst Aaron MacNeil on October 28 raised the firm's price target on Precision Drilling Corporation (NYSE:PDS) to C$145 from C$135 and maintained a Buy rating on the shares.
According to Insider Monkey’s data, Precision Drilling Corporation (NYSE:PDS) was part of 13 hedge fund portfolios at the end of Q3 2022, compared to 10 in the last quarter. Todd J. Kantor’s Encompass Capital Advisors is the biggest position holder in the company, with 603,636 shares worth $30.5 million.
10. YPF Sociedad Anónima (NYSE:YPF)
Number of Hedge Fund Holders: 14
YTD Share Price Gain as of December 27: 121.53%
YPF Sociedad Anónima (NYSE:YPF) is headquartered in Buenos Aires, and the energy company engages in the oil and gas upstream and downstream activities in Argentina. On November 10, YPF Sociedad Anónima (NYSE:YPF) reported Q3 GAAP earnings per share of $1.72 and a revenue of $5.18 billion, outperforming Wall Street consensus by $0.52 and $800 million, respectively. The shares have climbed over 121% so far this year as of December 27, making it one of the best performing energy plays of 2022.
On December 6, YPF Sociedad Anónima (NYSE:YPF) and Malaysia's Petronas announced that they plan to look for partners to construct a $10 billion liquefaction terminal and related infrastructure, which is essential for increasing production from the Vaca Muerta shale play. The companies signed a memorandum of understanding for the project in September 2022, agreeing they would target 25 million metric tons per year of LNG exports in 10 years.
Investment advisory Itau BBA upgraded YPF Sociedad Anónima (NYSE:YPF) to Outperform from Market Perform with a $10.50 price target on October 25. Analyst Alejandra Aranda issued the ratings update.
According to Insider Monkey’s third quarter database, 14 hedge funds were bullish on YPF Sociedad Anónima (NYSE:YPF), compared to 10 funds in the last quarter. The collective stakes held by elite funds in Q3 2022 increased to $60.7 million from $28.6 million in Q2 2022. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held the biggest position in the company, with 2.70 million shares worth $16.7 million.
9. TORM plc (NASDAQ:TRMD)
Number of Hedge Fund Holders: 15
YTD Share Price Gain as of December 27: 278.51%
TORM plc (NASDAQ:TRMD) is a London-based product tanker company that transports refined oil products and crude oil worldwide. The company transports gasoline, jet fuel, and naphtha. The company reported a Q3 GAAP EPS of $2.63 and a revenue of $448.1 million for the period, up 188.2% from the prior-year quarter and exceeding market consensus by $106.85 million. TORM plc (NASDAQ:TRMD) also paid a $1.46 per share quarterly dividend on December 8.
On May 25, Pareto analyst Eirik Haavaldsen assumed coverage of TORM plc (NASDAQ:TRMD) with a Buy rating and a DKK 140 price target. The company could distribute dividends equal to 40% of its market value over the next three years, the analyst told investors.
According to Insider Monkey’s data, 15 hedge funds held stakes worth $1.16 billion in TORM plc (NASDAQ:TRMD) at the end of the third quarter of 2022, compared to 12 funds in the last quarter worth $760 million. Howard Marks’ Oaktree Capital Management is the largest stakeholder of the company, with 53.8 million shares worth $1.10 billion.
8. Texas Pacific Land Corporation (NYSE:TPL)
Number of Hedge Fund Holders: 20
YTD Share Price Gain as of December 27: 94.64%
Texas Pacific Land Corporation (NYSE:TPL) is a real estate company that owns net royalty acres of oil and gas properties, and engages in easements and commercial lease activities, such as oil, gas and related hydrocarbons, power line and utility easements, and subsurface wellbore easements. Texas Pacific Land Corporation (NYSE:TPL) is one of the best performing energy stocks this year, with shares up about 95% year-to-date as of December 27.
On November 2, Texas Pacific Land Corporation (NYSE:TPL) reported a Q3 GAAP EPS of $16.82 and a revenue of $191.11 million, outperforming Wall Street estimates by $2.44 and $15.44 million, respectively. Quarterly royalty production came in at 23.4 thousand barrels of oil equivalent per day. The company also distributed a $3 per share quarterly dividend on December 15.
According to Insider Monkey’s third quarter database, 20 hedge funds held stakes worth $2.7 billion in Texas Pacific Land Corporation (NYSE:TPL), compared to 22 funds in the prior quarter worth $2.3 billion. Murray Stahl’s Horizon Asset Management is the leading position holder in the company, with 1.48 million shares worth $2.6 billion.
LRT Capital made the following comment about Texas Pacific Land Corporation (NYSE:TPL) in its October investor letter:
“Long time readers will know that we rarely invest in commodity businesses. However, there are periods in the market where commodity-based businesses outperform the broad indexes by a wide margin. Therefore, to have balance in the portfolio, we have long searched for a competitively advantaged company in the commodity space. We believe that Texas Pacific Land Corporation (NYSE:TPL), meets that criterion. Formed out of assets of formerly bankrupt railroads, TPL controls the largest acreage of land in the Permian basin – the center of the US shale oil industry. The company has two main sources of income: 1) royalties from oil & gas extracted on its properties – essentially a free call option on future oil prices and production; and 2) a water business which develops water resources and sells services to the fracking industry. We see TPL as an effective way to diversify the portfolio into a commodity exposed business that has a history of smart capital allocation and low risk of financial distress during periods of low oil prices. The company has no debt, and $281 million in cash. The company uses most of its cash flows to pay dividends and repurchase shares.”
7. Helix Energy Solutions Group, Inc. (NYSE:HLX)
Number of Hedge Fund Holders: 20
YTD Share Price Gain as of December 27: 111.83%
Helix Energy Solutions Group, Inc. (NYSE:HLX) is a Texas-based offshore energy services company, providing specialty services to the offshore energy industry in Brazil, the Gulf of Mexico, North Sea, the Asia Pacific, and West Africa regions. Helix Energy Solutions Group, Inc. (NYSE:HLX) is one of the best performing energy stocks in 2022.
On November 23, Helix Energy Solutions Group, Inc. (NYSE:HLX) announced that an affiliate of Talos Energy Inc. (NYSE:TALO) has extended the term of its contract with Helix for the Helix Producer I floating production vessel in the Gulf of Mexico for one year. The extension of the production processing contract indicates the solidity of its relationship with long-term customers.
BTIG analyst Gregory Lewis on October 26 upgraded Helix Energy Solutions Group, Inc. (NYSE:HLX) to Buy from Neutral with a $10 price target. The analyst cited Brent oil averaging $90 year-to-date and the Brent futures curve trending above $75 through 2024, which has supported offshore spending significantly this year and it is now on track to rise about 20%, which is the highest level since 2016.
According to Insider Monkey’s data, Helix Energy Solutions Group, Inc. (NYSE:HLX) was part of 20 hedge fund portfolios at the end of September 2022, compared to 15 in the preceding quarter. William B. Gray’s Orbis Investment Management is the biggest position holder in the company, with nearly 3 million shares worth $11.3 million.
6. CVR Energy, Inc. (NYSE:CVI)
Number of Hedge Fund Holders: 21
YTD Share Price Gain as of December 27: 77.36%
CVR Energy, Inc. (NYSE:CVI) is a subsidiary of Icahn Enterprises L.P. It is a Texas-based company engaged in petroleum refining and nitrogen fertilizer manufacturing activities in the United States. On November 21, CVR Energy, Inc. (NYSE:CVI) announced that it will explore a potential spinoff of its interests in the nitrogen fertilizer business, creating a new public company in the process. It is one of the best performing energy stocks in 2022.
On September 15, Wolfe Research analyst Sam Margolin downgraded CVR Energy, Inc. (NYSE:CVI) to Peer Perform from Outperform without a price target. The bull thesis may have played out as the company's dividends potentially peaked in Q3, the analyst told investors in a research note. In addition, CVR Energy, Inc. (NYSE:CVI)’s "high valuation versus peers warrants a pause," added the analyst. Still, he thinks the company should participate in a "supportive crude diff environment" as he sees the tailwinds heading into 2023.
According to Insider Monkey’s third quarter database, 21 hedge funds were long CVR Energy, Inc. (NYSE:CVI), compared to 22 funds in the last quarter. Carl Icahn’s Icahn Capital LP is the largest stakeholder of the company, with 71.2 million shares worth over $2 billion.
In addition to Occidental Petroleum Corporation (NYSE:OXY), Marathon Petroleum Corporation (NYSE:MPC), and NexTier Oilfield Solutions Inc. (NYSE:NEX), CVR Energy, Inc. (NYSE:CVI) is one of the best performers in the energy sector this year.
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Disclosure: None. 12 Best Performing Energy Stocks in 2022 is originally published on Insider Monkey.
