By Philip van Doorn, MarketWatch
Energy stocks had a very difficult 2017 — until September, when the sector rallied as evidence of increasing international demand mounted. That means we may still be in the early innings of an important and lasting rally for oil, and patient investors can make or recover a lot of money.
To see how the sector has fared, we’ll first list winning large-cap stocks, ETFs and mutual funds in this rally, and then take a broader look at Wall Street’s favorite energy stocks, based on analysts’ ratings and price targets.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -4.44% has returned 1.9% so far in September, with dividends reinvested. But its two energy components have done much better. The Dow’s top performer this month has been Chevron Corp. /zigman2/quotes/205871374/composite CVX -5.38% , with a return of 9%, while Exxon Mobil Corp. /zigman2/quotes/204455864/composite XOM -1.16% is up 7%.
Taking a broader look at the market, the S&P 500 index /zigman2/quotes/210599714/realtime SPX -4.41% has risen 1.5% so far in September, but its energy sector has jumped 9.8%, by far the best performance of its 11 sectors.
West Texas crude oil’s /zigman2/quotes/211629951/delayed CL.1 +4.87% recovery stalled from March through June, but the September trend has been positive:
Investors have gotten excited by the prospect of rising demand for oil. In his daily energy report on Wednesday, Phil Flynn, a senior market analyst at Price Futures Group, said “rising global demand and disappointing shale portion numbers are proving once again that the best cure for low prices are low prices.” His sunny outlook for oil hinges in part on the declining levels of investment in exploration and production projects around the world.
The Energy Information Institute reported that demand for oil “grew very strongly” during the second quarter, and it made significant upward revisions to its demand forecasts on Sept. 13.
Here are the 10 energy stocks in the S&P 500 that have performed best this month, according to FactSet:
|Company||Ticker||Total return - Aug. 31 - Sept. 27||Total return - 2017 through Sept. 27|
|Helmerich & Payne Inc.||/zigman2/quotes/209685666/composite HP||26%||-33%|
|Marathon Oil Corp.||/zigman2/quotes/205031829/composite MRO||23%||-30%|
|Chesapeake Energy Corp.||/zigman2/quotes/201364537/composite CHK||21%||-43%|
|Hess Corp.||/zigman2/quotes/203832174/composite HES||21%||-31%|
|Anadarko Petroleum Corp.||20%||-37%|
|Concho Resources Inc.||/zigman2/quotes/208942254/composite CXO||19%||-7%|
|Apache Corp.||/zigman2/quotes/200648444/composite APA||19%||-32%|
|Noble Energy Inc.||/zigman2/quotes/210375673/composite NBL||19%||-31%|
|Devon Energy Corp.||/zigman2/quotes/209479244/composite DVN||19%||-26%|
|National Oilwell Varco Inc.||/zigman2/quotes/208758290/composite NOV||18%||-8%|
You can click on the tickers for profiles of each company, as well as news coverage, ratios, ratings and financials.
You can see from the year-to-date numbers just how rough 2017 has been for oil stocks, despite the September rally.
Here are the 10 energy ETFs that have performed best during September, according to Morningstar Direct:
|ETF||Ticker||Total return - Aug. 31 - Sept. 26||Total return - 2017 through Sept. 26|
|PowerShares S&P SmallCap Energy ETF||/zigman2/quotes/208198168/composite PSCE||24%||-30%|
|SPDR S&P Oil & Gas Equipment & Services ETF||/zigman2/quotes/203361461/composite XES||24%||-25%|
|iShares US Oil Equipment & Services ETF||/zigman2/quotes/206923360/composite IEZ||19%||-23%|
|PowerShares Dynamic Oil & Gas Services ETF||/zigman2/quotes/200133030/composite PXJ||18%||-23%|
|VanEck Vectors Oil Services ETF||/zigman2/quotes/207596637/composite OIH||17%||-23%|
|VanEck Vectors Unconventional Oil & Gas ETF||/zigman2/quotes/210061692/composite FRAK||17%||-18%|
|SPDR S&P Oil & Gas Exploration & Production ETF||/zigman2/quotes/203527521/composite XOP||15%||-17%|
|PowerShares DWA Energy Momentum ETF||/zigman2/quotes/209506521/composite PXI||15%||-18%|
|First Trust Natural Gas ETF||/zigman2/quotes/209055321/composite FCG||14%||-15%|
|PowerShares Dynamic Energy Exploration & Production ETF||/zigman2/quotes/208549234/composite PXE||14%||-9%|
|Source: Morningstar Direct|
Here are the 10 open-ended energy mutual funds that have performed the best during September. When funds have multiple share classes, we just listed the best-performing class.
|Mutual Fund||Ticker||Total return - Aug. 31 - Sept. 26||Total return - 2017 through Sept. 26|
|Rydex Energy Services Fund; Investor||/zigman2/quotes/201969500/realtime RYVIX||19%||-22%|
|Fidelity Select Energy Service Portfolio||/zigman2/quotes/208030405/realtime FSESX||17%||-15%|
|Waddell & Reed Advisors Energy Energy Fund; Y||16%||-19%|
|Ivy Energy Fund; N||/zigman2/quotes/206160641/realtime IENRX||16%||-19%|
|ProFunds Oil Equipment Services & Distribution UltraSector; Investor||/zigman2/quotes/202505862/realtime OEPIX||15%||-22%|
|Invesco Energy Fund; R5||/zigman2/quotes/204175053/realtime IENIX||14%||-13%|
|BlackRock Energy & Resources Portfolio; Institutional||/zigman2/quotes/203386200/realtime SGLSX||14%||-12%|
|Rydex Energy Fund; Investor||/zigman2/quotes/202000312/realtime RYEIX||13%||-12%|
|Icon Energy; A||/zigman2/quotes/203871131/realtime ICEAX||13%||-8%|
|Fidelity Select Energy Portfolio||/zigman2/quotes/204162846/realtime FSENX||12%||-12%|
|Source: Morningstar Direct|
For a broad list of analysts’ favorite energy stocks, we looked at the S&P Composite 1500 Index, which comprises the large-cap S&P 500, the S&P Mid Cap 400 Index /zigman2/quotes/210599897/delayed MID -5.69% and the S&P 600 Small Cap Index /zigman2/quotes/210599868/delayed SML -7.18% .
Here are the 10 S&P 1500 energy stocks with majority “buy” ratings with the highest implied 12-month upside potential, based on consensus price targets among analysts polled by FactSet:
|Company||Ticker||Closing price - Sept. 27||Consensus price target||Implied 12-month upside potential||Total return - Aug. 31 - Sept. 27||Total return - 2017, through Sept. 27|
|QEP Resources Inc.||/zigman2/quotes/207618739/composite QEP||$8.49||$13.44||58%||12%||-54%|
|Tetra Technologies Inc.||/zigman2/quotes/209715792/composite TTI||$2.77||$4.29||55%||34%||-45%|
|Contango Oil & Gas Co.||/zigman2/quotes/208310902/composite MCF||$5.06||$7.64||51%||10%||-46%|
|Carrizo Oil & Gas Inc.||$17.25||$25.92||50%||28%||-54%|
|Range Resources Corp.||/zigman2/quotes/205059849/composite RRC||$20.41||$29.62||45%||18%||-40%|
|Callon Petroleum Co.||/zigman2/quotes/201917664/composite CPE||$11.08||$15.76||42%||7%||-28%|
|Gulfport Energy Corp.||/zigman2/quotes/203981280/composite GPOR||$14.76||$19.69||33%||18%||-32%|
|Green Plains Inc.||/zigman2/quotes/204775795/composite GPRE||$20.40||$26.88||32%||10%||-25%|
|WPX Energy Inc. Class A||/zigman2/quotes/204372171/composite WPX||$11.51||$14.88||29%||15%||-21%|
|Kinder Morgan Inc. Class P||/zigman2/quotes/208455654/composite KMI||$19.33||$24.47||27%||0%||-5%|
As always, do your research before making any investment.