🎁 💸 Warren Buffett's Top Picks Are Up +49.1%. Copy Them to Your Watchlist – For FreeCopy Portfolio

Energy equities and commodities: Mizuho picks this sector

Published 04/08/2024, 12:45 AM
© Reuters.

Investing.com-- U.S. energy sector shares saw a stellar run-up since mid-February, as they tracked a strong run-up in commodity prices from 2024 lows. This run-up saw Mizuho analysts question whether energy stocks or commodity prices presented more value.

The S&P 500 energy sector (NYSE:XOP) was now outperforming the S&P 500 by a margin of 8% so far in 2024, Mizuho analysts said in a recent note. The gains came largely on the back of a rebound in oil and gas prices, while refining margins also improved.

Mizuho favors oil stocks, selective on gas and refiners 

Mizuho analysts said they favored “oily” stocks, with top sector picks Chevron Corp (NYSE:CVX), Coterra Energy Inc (NYSE:CTRA) and Civitas Resources Inc (NYSE:CIVI). While gas and refining stocks had largely outperformed gas and refining prices in recent weeks, oil exploration and production stocks were still trading largely in line with West Texas Intermediate crude prices.

Gas and refining stocks appeared open to some pullback going into the second quarter. 

Still, Mizuho analysts said they preferred some gas explorers and producers, namely Chesapeake Energy (NYSE:CHK) Corp (NASDAQ:CHK) and Range Resources Corp (NYSE:RRC). 

The brokerage recently downgraded all U.S. refining stocks to neutral, stating that while refining margins had risen substantially in recent weeks, they still remained weak relative to historic levels.

The refining sector’s outperformance of refining margins also presented some “overhang,” which made Mizuho analysts cautious over some easing valuations in the near-term.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.