The year 2022 has brought countless surprises and obstacles to markets. We have experienced high volatility, a sharp rise in the price of commodities such as oil or natural gas, as well as the rapid fall of the FTX cryptocurrency exchange. This year has been a year of record prices and a fall in inflation is in sight. Interest rate rises have begun to slow slightly, but the impending global recession is irreversible. Today, investors are solving the dilemma of where to invest their money so that high inflation doesn’t swallow it. So let’s take a look together at our selection of the best tools for 2022. We will also talk about their direction in 2023.
It is typical of growth stocks that during economic expansion, when interest rates are low, they have a growth tendency. Those stocks have already experienced a significant rally, outperforming value stocks or the S&P 500 index as a whole in the period after the last financial crisis. Today, though, everything is different. The increase in key interest rates triggered a big investor shift away from growth stocks. So where did investors start to “spill over” their capital? The trend of today is value stocks, which offer interesting buying opportunities for opportunistic long-term investors.
We have diversified our rankings to include the commodity or currency sector, focusing primarily on performance in 2022, and this is how it turned out:
- Occidental Petroleum Corp. (OXY) +121%
- Marathon Petroleum Corp +76%
- Exxon Mobil Corporation +72%
- Chevron Corporation +44% *
- Merck +43% *
- Lockheed Martin LMT +37% *
- Eli Lilly LLY +31% *
- Activision Blizzard +15% *
- USD +7.2%
- Platinum +2.7%
Let’s take a closer look at the top three companies in the ranking:
- Occidental Petroleum Corp. (OXY)
Occidental Petroleum focuses on oil, natural gas and commodity exploration and production, as well as petrochemical products. For the third quarter of 2022, the company reported a profit of $2.5 billion on net sales of $9.4 billion. Net profit increased by 305% year-on-year and net sales by 38%.
Warren Buffett also owns a stake in OXY. According to the latest available data, his company Berkshire Hathaway owns 21.4% of OXY shares.Looking ahead, it is very important to note that Buffett’s company won regulatory approval in August to buy up to 50% of this oil and gas producer. The share value could reach $75 to $100 per share next year from $62 per share today. Over the course of 2022, the value of the shares at this capitalization will increase by approximately 121%.
- Marathon Petroleum Corp
Marathon Petroleum Corporation is an energy company engaged in the refining, marketing, and retailing of crude oil in the United States. Adjusted earnings before interest, taxes, depreciation, and amortization were outstanding in the third quarter of 2022, up to $6.8 billion from $2.4 billion in the third quarter of 2021. Speaking in the company’s favor is the fact that market demand for their products is very strong, while they are also improving their operations and business. Other positives included the completion of a $15 billion share buyback and the announcement of a quarterly dividend increase of approximately 30%. From the current $111 per share, the value could increase to $134 to $153 in the next period.
- ExxonMobil Corporation
One of the world’s largest energy suppliers and chemical manufacturers, also dedicated to developing next-generation technologies. Giant ExxonMobil can be satisfied in 2022. Last quarter was one of its best ever, thanks in part to high oil prices, rising production and strong refining. A positive factor was the launch of the FLNG project in Africa, which could provide further growth in the near future. The outlook for energy prices over the next few years is very strong; we estimate an increase in the company’s value to US$138 from the current price of US$105 per share. [4]. However, this increase may be hampered by weaker results for the last quarter of the year. Over the past year, this title has gained 72%.
Conclusion
The winners of 2022 were clearly the shares of energy companies, which “rode” on high oil and gas prices. The forecast for 2023 is therefore clear, barring unforeseen events and a severe global recession, this performance could continue. An end to the conflict in Ukraine is not in sight and commodity supply will remain constrained.
Olívia Lacenová, Analyst at Wonderinterest Trading Ltd.
All data are current as of 21.12.2022.
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