Is now the time to invest in oil as oil stocks top the S&P 500?

Oil stocks have enjoyed massive gains in the S&P 500. We take a look at the index’s best and worst performers and if now is a good time to invest in crude oil.

oil well nodding donkeys
(Image credit: © Getty Images)

Oil stocks are the biggest winners in the S&P 500, enjoying a rise of over 100% so far in 2022, according to data from online trading platform CMC Markets. If the upward trend continues, investors looking to take advantage of the S&P 500 best performers could do well from crude oil stocks.

Despite concerns around a global economic slowdown, the price of a barrel of Brent crude oil has been sitting around the $92 mark for some time now, and Opec+ announced a cut in production earlier this month that should ensure prices don’t fall again sharply even if major economies enter a recession.

We look at the best performing crude oil stocks in the S&P 500.

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Best performing oil stocks

The best-performing stocks in the S&P 500 as of August 2022 were all oil stocks. Occidental Petroleum (NYSE: OXY) topped the chart, with a 126.8% share price gain in the 12 months to August.

Coterra Energy (NYSE: CTRA) and Hess (NYSE: HES) enjoyed gains of 61% and 51.9% respectively. Earnings for both companies reached new heights in the fresh half of 2022 as they both benefited from the fuel crisis in the US.

Exxon Mobil’s stock (NYSE: XOM) jumped 58.4%, benefiting from the increase in crude oil prices in the first half of the year.

Enphase Energy (NYSE: ENPH), which develops and manufactures solar panels and batteries, came fourth in the top five, benefiting from an increase in demand for solar power as energy prices soared throughout Europe.

Overall, oil and energy stocks’ success is probably due to surging energy prices in recent months and the maintained demand for crude oil, according to CMC Markets. In addition, some oil and gas companies “boast impressive dividend payments, which could have made them increasingly attractive to shareholders,” according to CMC Markets’ chief market analyst, Michael Hewson.

“It’s clear that these energy stocks are performing really well, as a direct result of what has been happening around the world over the last eight months,” he said. “However, because of this, it is not unlikely that these percentages will experience a drop-off by this time next year.”

The S&P 500’s worst performers

Many stocks that enjoyed great gains throughout the pandemic have struggled to maintain them. Tech companies in particular have suffered as investors worry that their good run might be over as life returns to normal. “People are back to travelling, socialising and commuting now, and this would definitely have had an effect on the stock price for certain companies,” said Hewson.

Netflix (Nasdaq: NFLX) is the biggest loser in the S&P 500, having dropped 62.7% so far this year. The company reported yesterday it had gained 2.4 million subscribers, which helped its share price. However earlier this year it warned subscriber growth had shifted into a reverse, which spooked investors.

Align Technology (Nasdaq: ALGN) saw a 57.2% dip in its share price. The company manufactures Invisalign, an “invisible” alternative to braces. Sales have dropped so far in 2022, which isn’t really surprising. The treatment is lengthy and costly, and consumers could choose not to invest in discretionary health products as they struggle with the rising costs of living.

Cruise operator Carnival (NYSE: CCL) has seen a 55% decline in its share price as it struggles to recover post-pandemic.

PayPal (Nasdaq: PYPL) came in fourth, possibly because its former CFO announced he was leaving the fintech firm for Walmart earlier this year which investors could see as a “possible threat to stability”.

Finally, Facebook’s parent company Meta Platforms’ (Nasdaq: META) share price declined 52.7%.

Nicole García Mérida

Nic studied for a BA in journalism at Cardiff University, and has an MA in magazine journalism from City University. She joined MoneyWeek in 2019.