- Halliburton (HAL): The well-known oil services and products provider is growing quickly in 2022 but has room still meaning investors aren’t too late to the table.
- Torm PLC (TRMD): Consider the oil tanker stock that maintained strong earnings in a down 2021 and remains in position to capitalize in 2022.
- ChampionX Corp. (CHX): Champion already staged a turnaround in a difficult 2021, look for more in 2022.
There are lots of reasons to consider adding energy positions to one’s portfolio right now. Energy was the best-performing sector of the S&P 500 in 2021. The S&P 500 returned a very strong 28.7% for all of 2021. But energy stocks the way, with 53.4% returns.
That momentum has continued into 2022. Although the overall market has cooled significantly, energy continues to perform very well. In fact, the energy sector is up 43.7% year-to-date while the S&P 500 index has remained in the negative for nearly the entirety of the year. Part of that has to do with ongoing geopolitical tension as the war in Ukraine continues without an end in sight. But there are other factors in play as well and inflation is likely to continue to result in energy prices that will remain high in any geopolitical setting.
The energy sector is a broad compilation of stocks and subsectors. Generally, I take it to mean oil, but it can include many other forms of energy. Here though, I will look at oil. Let’s get granular here though because there are certain portions within the energy sector performing better than others.
Oil and gas equipment and services are actually up 55% year-to-date. So let’s look at some energy stocks to consider within that smaller subsector.
Energy Stocks: Halliburton (HAL)
Halliburton (NYSE:HAL) is a fairly well-known name in the oil industry. But perhaps not that many people know what Halliburton actually does. As a services and products provider to the energy industry it is a picks and shovels provider to oil and gas firms.
It’s more complex than that of course. Halliburton helps energy firms locate hydrocarbons and understand and manage geological data among others. The company also helps with drilling evaluation and well completion. Its services sector helps energy firms optimize production throughout the lifecycle as well.
And HAL stock has been doing well throughout 2022. It currently trades above $40 and has appreciated in price by nearly 70% year-to-date. A word of caution: the stock is trading at consensus prices. However, the high analyst price for HAL stock is $50 and that doesn’t seem unreasonable.
Oil prices have spiked following the Russian invasion of Ukraine. Brent crude has stayed consistently near $100 following the invasion. As long as the war continues, dynamics favor companies including Halliburton.
Torm PLC (TRMD)
Unlike Halliburton, Torm PLC (NASDAQ:TRMD) still has room to rise based on a consensus stock price of $12.92. The Copenhagen-based firm maintains a fleet of 85 tankers and eight global offices across Europe, the U.S., south Asia and southeast Asia.
The tanker industry experienced a marked slowdown in 2021 due to the pandemic. However, 2022 is the start of a reopening and Torm expects ton per mile demand to grow by 4% between 2022 and 2024. The company notes that Russia’s invasion of Ukraine has introduced great uncertainty to its market. However, it also notes that the volatility has sent crude tanker freight rates to their highest levels since early 2020.
Torm’s vessels carry crude oil and fuel oil, two products in demand currently. Last year was a difficult year for the company. But notably, it still managed to eke out $188 million in gross profit during the year. That was down from $341 million a year earlier.
The company hasn’t released any earnings reports yet in 2022. When it does it could easily reach target prices if it shows a strong turnaround.
Energy Stocks: ChampionX Corp. (CHX)
ChampionX Corp. (NASDAQ:CHX) is an energy company that provides products and services for the global upstream oil and natural gas industry. This includes chemical technologies, lift technologies and well drilling.
Although CHX stock has performed well in 2022 there’s reason to believe it has room to grow. It remains near the middle of its 52-week range. That is more suggestive of growth potential than many other names in the sector which are close to their 52-week highs.
ChampionX actually had a strong 2021 despite the tough overall market conditions. Revenues increased from $1.899 billion in 2020 to $3.074 billion in 2021. That led to the firm posting a $113.299 million net income, up from a $743.93 million net loss in 2020.
ChampionX isn’t a company that receives much attention in a crowded energy sector but it is headed in the right direction and now is a good time to catch its rise.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.