The stock market retreated in the last trading session with expectations of weak economic data due Wednesday, along with renewed COVID-19 restrictions in China. The S&P 500 index has dropped 19.1% year-to-date.
Moreover, Citigroup Inc. (C) analysts forecast the S&P 500 to finish the year at 4,200, cutting their forecast in late June from 4,700. This is still up from its last trading session’s finish, near 3,854. According to a Citi note in late June, “the better than feared earnings and signs of peaking rates set up a positive second half of the year.”
On the other hand, Oppenheimer’s Chief Investment Strategist John Stoltzfus expects S&P 500 to rebound to 4,800. He said, “Even in the face of uncertainty and palpable risks of recession, our longer-term outlook for the US economy and the stock market remains decidedly bullish. We believe US economic fundamentals remain on solid footing. US growth should remain well supported by consumer demand, business investment, and government spending.”
Despite the risk-off environment, some S&P 500 stocks gained momentum owing to their strong fundamentals and solid growth prospects. The stocks have shown significant resilience against market fluctuations and are expected to maintain an upward trend.
Thus, we think investors should consider adding top-performing S&P 500 stocks Occidental Petroleum Corporation (OXY), Hess Corporation (HES), Valero Energy Corporation (VLO), and Exxon Mobil Corporation (XOM) to their portfolio.
Occidental Petroleum Corporation (OXY)
OXY engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, Africa, and Latin America. The company operates through three segments: Oil and Gas; Chemical; and Midstream and Marketing.
OXY develops, processes, transports, stores, and markets oil and condensate, natural gas liquids (NGLs), and natural gas. It also manufactures and markets basic chemicals.
On June 27, OXY’s subsidiary, 1PointFive, and Manulife Investment Management entered a lease agreement for approximately 27,000 acres of timberland in Western Louisiana. This agreement provides 1PointFive with access to subsurface pore space and surface rights to develop and operate a carbon sequestration hub, with access to permanently store industrial carbon emissions.
The agreement is expected to promote the company’s sustainability goals and boost its revenues.
OXY's net sales increased 57.7% year-over-year to $8.35 billion in the fiscal 2022 first quarter ended March 31, 2022. Its income from continuing operations rose 1,530.8% from the prior-year period to $4.88 billion.
The company’s adjusted income attributable to common stockholders and adjusted earnings per share came in at $2.13 billion and $2.12, up 1,664% and 1,513.3%, respectively, year-over-year.
The $9.06 billion consensus revenue estimate for the fiscal 2022 second quarter (ended June 2022) represents a 50.7% improvement from the same period in 2021. Analysts expect OXY’s EPS for the to-be-reported quarter to increase 811.3% year-over-year to $2.92. The company has topped the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has increased 71.5% over the past six months and 105.3% year-to-date to close the last trading session at $59.52. It is currently trading above its 200-day moving average of $45.47, indicating an upward trend.
OXY’s POWR Ratings reflect this strong outlook. The company has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
OXY has a grade of A for Momentum and a B for Growth and Quality. Within the B-rated Energy-Oil & Gas industry, it is ranked #30 of 97 stocks.
To see additional POWR Ratings (Sentiment, Value, and Stability) for OXY, click here.
Hess Corporation (HES)
HES is an exploration and production company. It explores, develops, produces, purchases, transports, and sells crude oil, natural gas liquids (NGLs), and natural gas. The company operates through two segments: Exploration and Production; and Midstream. It has total reserves of more than 1,309 million barrels of oil equivalent.
On April 27, HES announced discoveries at Barreleye, Lukanani, and Patwa on the Stabroek Block, offshore Guyana. These discoveries further underpin the development potential of the block. The Gross discovered recoverable resource estimate for Stabroek Block increased to approximately 11 billion barrels of oil equivalent. These discoveries might provide numerous development opportunities for the company.
On April 4, HES sanctioned the development of Yellowtail, the fourth and largest development on the Stabroek Block, with a production capacity of nearly 250,000 gross barrels of oil per day (bopd) starting in 2025. It is expected to boost the company’s growth and profitability.
In the fiscal 2022 first quarter ended March 31, 2022, HES’ revenues and non-operating income increased 23.6% year-over-year to $2.37 billion. Its income before income taxes grew 52.9% from the year-ago value to $702 million.
In addition, the company's adjusted net income attributable to HES and adjusted net income per share came in at $404 million and $1.30, registering increases of 60.3% and 58.5%, respectively, from the prior-year period.
The $2.73 billion consensus revenue estimate for the fiscal 2022 second quarter (ended June 2022) represents a 71% improvement from the same period in 2021. Analysts expect HES’ EPS for the to-be-reported quarter to increase 796.2% year-over-year to $2.15.
The company has an impressive revenue and earnings history as it has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 32.9% year-to-date to close the last trading session at $98.40. It is currently trading above its 200-day moving average of $95.73, indicating an uptrend.
HES' POWR Ratings reflect a promising outlook. The stock has a grade of A for Momentum. Within the Energy - Oil & Gas industry, it is ranked #81 of 97 stocks.
To see additional POWR Ratings (Value, Growth, Stability, Quality, and Sentiment) for HES, click here.
Valero Energy Corporation (VLO)
VLO manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments: Refining; Renewable Diesel; and Ethanol. It owns 15 petroleum refineries and 12 ethanol plants.
In June, VLO reduced its debt by approximately $300 million by acquiring $300 million of 4% Gulf Opportunity Zone Revenue Bonds Series 2010. This transaction, combined with debt reduction and refinancing transactions completed in the third and fourth quarters of 2021 and the first quarter of 2022, collectively reduced VLO’s debt by nearly $2.3 billion.
VLO's revenues increased 85.2% year-over-year to $38.54 billion in the fiscal 2022 first quarter ended March 31, 2022. Its income before income tax expense stood at $1.22 billion, up 258.3% year-over-year.
Furthermore, its adjusted net income attributable to VLO stockholders and adjusted EPS came in at $944 million and $2.31, registering a rise of 241.7% and 240.9%, respectively, year-over-year.
Analysts expect VLO’s EPS to grow 1,618.7% year-over-year to $8.25 for its fiscal 2022 second quarter ended June 2022. The $47.23 billion consensus revenue estimate for the to-be-reported quarter represents a 70.2% rise from the same period in 2021. The company has topped the consensus revenue and EPS estimates in each of the trailing four quarters.
VLO’s shares have gained 43.5% year-to-date and closed the last trading session at $107.79. VLO is currently trading above its 200-day moving average of 92.68.
VLO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, equating to a Buy in our proprietary rating system.
VLO has a grade of A for Momentum and B for Growth and Quality. Within the Energy-Oil & Gas industry, it is ranked #12 of 97 stocks.
To see additional POWR Ratings (Stability, Value, and Sentiment) for VLO, click here.
Exxon Mobil Corporation (XOM)
XOM explores, produces, and sells crude oil and natural gas in the United States and internationally. The company operates through three segments: Upstream; Downstream; and Chemical.
In addition, it manufactures, trades, transports, and sells petroleum products, petrochemicals, and other specialty products. It has more than 20,528 operated wells with proven reserves.
On June 21, XOM and QatarEnergy signed an agreement to develop Qatar’s Northeast project, expanding Qatar’s annual LNG capacity from 77 million to 110 million tons by 2026. “We are collaborating with QatarEnergy on North Field East to accelerate the production of secure, affordable, and cleaner energy our world needs,” said Darren Woods, XOM’s Chairman, and CEO.
“ExxonMobil has a long history of working in Qatar, responsibly producing energy, and we look forward to continuing our relationship for the benefit of all of our stakeholders,” he added.
In the fiscal 2021 first quarter ended March 31, 2022, XOM's revenues and other income increased 53% year-over-year to $90.50 billion. Its income before income taxes rose 138.2% from the year-ago value to $8.56 billion.
In addition, net income attributable to XOM and earnings per common share came in at $5.48 billion and $1.28, registering increases of 100.7% and 100%, respectively, year-over-year.
The consensus revenue estimate of $94.22 billion for the fiscal 2022 first quarter (ended June 2022) represents a growth of 39.1% from the prior-year period. The consensus EPS estimate of $3.65 for the to-be-reported quarter indicates a 232.2% year-over-year rise. It's no surprise that XOM has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 40% year-to-date and closed the last trading session at $85.64. It is currently trading above its 200-day moving average of $76.39, indicating an uptrend.
XOM's POWR Ratings reflect this promising outlook. It has a grade of A for Momentum and a B for Quality. Within the same industry, it is ranked #57 of 97 stocks.
To see additional POWR Ratings (Value, Stability, Growth, and Sentiment) for XOM, click here.
OXY shares were trading at $56.80 per share on Tuesday morning, down $2.72 (-4.57%). Year-to-date, OXY has gained 96.77%, versus a -18.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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