US Energy Stocks Rally Under The Street's Radar: Seasonal Strength, Golden Cross Await Latecomer Bulls
Portfolio Pulse from Piero Cingari
U.S. energy stocks, particularly those within the Energy Select Sector SPDR Fund (XLE), have rallied 16% from January 2024 lows, outperforming all S&P 500 sectors over the past month. This surge is attributed to a 15% year-to-date increase in oil prices and a 16% rise in natural gas prices. Despite this, Wall Street analysts have not significantly revised price targets or earnings forecasts for these stocks, including Exxon Mobil Corp. (XOM), which has seen its median price target slightly decline. The sector's performance is bolstered by strong seasonality in March and April, and technical indicators suggest a bullish outlook with a potential golden cross signal. Chevron Corp (CVX) also typically sees high returns in April, aligning with the sector's historical performance.
March 19, 2024 | 4:43 pm
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NEUTRAL IMPACT
Exxon Mobil Corp.'s median price target has slightly declined despite a 15% increase in crude prices year to date, indicating a lag in analyst optimism.
The slight decline in Exxon Mobil's median price target, despite rising crude prices, suggests that the stock's recent performance may not yet be fully reflected in analyst forecasts. This discrepancy could lead to potential upside as analysts adjust their expectations.
CONFIDENCE 80
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
Chevron Corp typically sees its highest monthly returns in April, aligning with the sector's strong seasonal performance.
Chevron Corp's historical performance, with high returns typically seen in April, aligns with the broader energy sector's seasonal strength. This historical trend supports a bullish outlook for CVX in the short term.
CONFIDENCE 75
IMPORTANCE 75
RELEVANCE 80
POSITIVE IMPACT
The Energy Select Sector SPDR Fund has rallied 16% from January 2024 lows, nearing its November 2022 highs, driven by rising oil and natural gas prices.
The rally in XLE is directly tied to the increase in oil and natural gas prices, with strong seasonality and bullish technical indicators supporting further gains. The lack of analyst forecast revisions suggests potential for more upside as the sector gains attention.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100