Never mind earnings. The real mover this month has been energy.
TradeStation’s RadarScreen® shows the SPDR Energy Fund (XLE) up 13 percent in April — almost triple the gain of the broader S&P 500. In addition, 11 of the index’s 20 best performing stocks are in the sector.
Maybe you’ve forgotten about the space. After all, it’s lagged badly since oil collapsed in 2014. But now strong global economic growth and geopolitical forces are driving prices higher, and investors seem to be trickling back.
It’s worth learning a few major groups within the broad sector — especially because entirely new sub-industries are coming into existence before our very eyes.
Everyone knows the “majors,” big sprawling firms that do everything from exploring, to production, refining and marketing: Exxon Mobil (XOM) and Chevron (CVX). These tend to move less than the broader XLE, although they can be leveraged easily because of their deep options liquidity.
Refiners focus simply on turning crude oil into “distillates” like gasoline and heating oil. Valero (VLO), Marathon Petroleum (MPC) and Phillips 66 (PSX) are the most active names in that space.
Then you have exploration and production (E&P) companies — the most numerous group. The biggies include ConocoPhillips (COP), Anadarko Petroleum (APC), Hess (HES), Marathon Oil (MRO), Occidental Petroleum (OXY) and Devon Energy (DVN).
Within this E&P space, there’s a smaller, niche that specializes more on “unconventional” operations. (These “shale” players have helped turn the U.S. back into a major force in global energy markets.) These tend to be highly volatile and might not be suited to all investors: Whiting Petroleum (WLL), Oasis Petroleum (OAS), SM Energy (SM) and WPX Energy (WPX).
Next, the liquefied-natural gas (LNG) tanker stocks are a new industry that’s begun major operations in the last year: Cheniere Energy (LNG), Golar LNG (GLNG) and GasLog (GLOG). Their massive vessels carry U.S. natural gas to markets Asia and Europe.
Then you have the oil-field servicers. The big names include Halliburton (HAL), Schlumberger (SLB) and Baker Hughes (BHGE). There’s also a subset of highly volatile firms that specialize in offshore drilling like Transocean (RIG), Ensco (ESV) and Diamond Offshore (DO).
This is not intended as an exhaustive list, nor as a trade recommendation. We just wanted to highlight some of the big players in a sector that seems to be making a comeback now that the global economy is strong and oil is pushing higher. And remember, trading options may not be suitable for all investors.