The energy sector, specifically stocks under the Energy Select Sector SPDR Fund (NYSEARCA:XLE (NYSE:XLE)), is showing potential for a rebound despite trailing behind the S&P 500's 12% return this year. This comes as the ongoing Russia-Ukraine war underscores the strategic importance of energy independence, according to an analysis published on Wednesday.
The XLE fund experienced a significant 59.39% rise in 2022, but has been slightly subdued this year. Despite this, there's been a notable surge in capital investment in the oil and gas upstream sector. The sector has seen a 39% increase in capital investment, with projections indicating a leap to $640 billion by 2030.
TradeSmith's analytical tools have identified lucrative energy stocks within XLE's holdings. Remarkably, 81.25% of these stocks are classified in the Green Zone according to the Health Indicator system, suggesting they are currently in a favorable position for investors.
The analysis concludes by identifying five companies - Kinder Morgan Inc. (NYSE:NYSE:KMI), The Williams Companies Inc. (NYSE:NYSE:WMB), Chevron Corp. (NYSE:NYSE:CVX), ONEOK Inc. (NYSE:OKE), and Exxon Mobil Corp. (NYSE:NYSE:XOM) - characterized by their low Volatility Quotient (OTC:QTNTQ) (VQ) levels. This indicates these companies carry lower investment risk, which could be an attractive proposition for investors looking to enter or expand their positions in the energy sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.