It may not take genius to win a seat in Congress – but it’s no simple task either.
We may love to hate Congress, but we have to admit… it’s filled with smart, savvy folks.
To help prove my point, let’s bring this back to my area of expertise – investing – and take a look at Washington politicians’ track record.
According to a December 2004 Georgia State University study, U.S. Senators’ average annual stock performance from 1993 to 1998 beat the S&P 500 by around 12.3%.
That’s not an outrageous fortune – but it’s not bad.
According to that same Georgia State study, corporate insiders on average outperformed the market by just 7.4%.
And the stock portfolios of the average U.S. household? We on average underperformed the S&P by 1.5%.
Of course, many would say senators outperform in the market not because of their intelligence, but due to inside knowledge. You’re probably not wrong.
In a fit of public shame perhaps, Congress attempted to police itself in that regard by passing Public Law 112-105. The Stop Trading on Congressional Knowledge Act of 2012 prohibits members of Congress and other federal employees from using nonpublic information for private profit.
If you think the STOCK Act put an end to active trading by lawmakers or cut their profits, think again.
While 2022 saw all the major U.S. indices suffer their worst downturn since the 2008 financial crisis, many members of Congress did pretty well last year.
Data released by the website Unusual Whales shows that U.S. Rep. Patrick Fallon (R-Texas), for example, earned 51.6% on his investments in 2022, while U.S. Rep. Debbie Wasserman-Schultz (D-Florida) saw a gain of 50.8%. Other members of Congress posted gains of 10% or greater as the benchmark S&P 500 index declined 19% on the year, and the technology-laden Nasdaq Composite fell 33%.
So… it seems that, despite the good intentions of the STOCK Act, members of Congress remain savvy investors…
And perhaps investors worth following.
Thanks to Public Law 112-105, we now can.
Everything Is Public Now
The STOCK Act of 2012 doesn’t just put the hammer on inside trading among members of Congress.
It makes their active trades public records.
That means everyday individuals now have the legal ability to profit from the same trades made by Washington lawmakers.
The law allows individuals to legally invest in the same stocks as members of Congress, providing access to potentially profitable investment opportunities.
By piggybacking on the trades made by members of Congress, retail investors can take advantage of the expertise and insights and potentially achieve higher returns.
Public Law 112-105 has made it possible for everyday individuals to invest like a D.C. legislator and potentially benefit from the same investment opportunities.
After all, even the spouses of legislators have proven to be better-than-average investors. For example, Paul Pelosi, the husband of former Speaker of the House Nancy Pelosi, is referred to as the “world’s greatest investor” after making millions speculating in call options on Apple Inc. (AAPL) and Tesla, Inc. (TSLA).
In recent years, there has been a growing trend among Republican legislators in Washington to invest in the energy sector.
As you might know, the energy sector is a favorite of mine.
Here’s why…
The Energy Bull Isn’t Over Yet
The price of crude oil hit $120 a barrel in March 2022, sending companies in the sector soaring.
And while prices have come back down to Earth, as a result, oil and gas companies did very well in 2022.
Just take a look at the performance of the Energy Select Sector SPDR Fund (XLE):
In fact, energy stocks were the only 2022 winners.
As Fidelity noted in a recent report, “Not only were energy stocks the only sector to finish in the green last year, they soared 59%.”
Why did energy stocks do so well in 2022?
Well, it was a perfect storm…
After COVID-19 lockdowns caused oil demand to plummet in 2020, the world started to get “back to normal” in 2022. Many people returned to the office, travel picked up…
Demand soared.
Then you have Russia’s invasion of Ukraine in February 2022. The invasion and the continuing war led to bans on Russian crude oil and natural gas. Russia retaliated by first limiting natural gas deliveries via the Nord Stream 1 pipeline to Europe. Leaks in the pipeline now have the pipeline shut down indefinitely.
The Biden administration played a role as well. The administration has released the fewest drilling permits since the Nixon administration and canceled the Keystone Pipeline project.
As a result, energy companies saw record profits in 2022.
I was early to this trend. In fact, I started loading up on energy companies in late 2021.
And my big bet on energy has played out well for my readers…
With oil and gas stocks all over the place so far in 2022, you may think bull is over. But I believe there is still more profit potential ahead.
Yes, renewables like solar and wind may be the energy sources of the future. But that’s a faraway future. Solar, wind, and the rest must stand on the shoulders of “old energy” sources in order to do things on their own.
Crude oil will still be in high demand, regardless of the current “clean” energy sources available, for years to come. Global demand for gas is at an all-time high, while crude oil is nearly at record-setting demand levels.
Where will all of that fuel come from?
Without new investments in crude, prices could move much, much higher in the coming years and reward investors that stick with this “old” form of energy.
Rising demand in the global crude market, coupled with uncertain supply, is a recipe for rising oil prices.
And rising oil prices will be good for “old energy” companies.
In fact, I’ve gone on record stating that I believe the spring season demand could send oil prices soaring to $120 a barrel.
Right now, energy companies remain the crème de la crème of stocks.
Outside of energy, the S&P 500 remains characterized by negative forecasted earnings growth. FactSet currently estimates that the S&P 500 will report an earnings decline of 4.8% in the fourth quarter, while the energy sector is still expected to post earnings growth of 57.7%. Without energy, the S&P 500’s earnings decline would be even bigger, at an 8.9% drop.
I should also add that, for calendar year 2022, the S&P 500 is expected to achieve full-year earnings growth of 3.9%. The energy sector is anticipated to achieve 149.1% average earnings growth for 2022.
It’s clear to me that energy stocks should emerge as the new market leaders – and I’m not alone.
The major stock indexes have recently boosted their energy weights. This means that institutional investors with lots of money to move around are now net buyers of energy stocks – since they tend to “track” indexes.
So, in this report, we will take a closer look at the Top 5 energy stocks – and other “recession proof” stocks – that Republican members of Congress are quietly investing in.
With strong sales growth and profits ahead, these stocks are must-haves for your portfolio as we navigate our way through this turbulent environment…
Republican-Backed Stock #1
Exxon Mobil Corporation (XOM)
From humble beginnings as a regional marketer of kerosene more than 135 years ago, Exxon Mobil Corporation (XOM) has grown to become one of the biggest energy providers in the world. The company’s products are marketed under four key brands: Esso, Exxon, Mobil and ExxonMobil.
During the third quarter of 2022, Exxon achieved its highest quarterly refining throughput globally since 2008, as well as achieved record production of 560,000 barrels of oil equivalent per day (BOE/D) in the Permian Basin. Total third-quarter production increased by 50,000 BOE/D and totaled 3.7 million BOE/D.
Exxon Mobil is the major American player in the global energy economy and a favorite among Republican members of Congress.
For example, U.S. Rep. Chris Jacobs of New York state bought shares of XOM when it was trading around $86. Since then, it has traded as high as $119. That means investors could have made around 40% gain in that period in comparison to a tepid 5% gain in the S&P 500.
Not a bad way to ride a “Republican Red Wave” to profits…
One of the reasons for Exxon’s recent production strength is its venture in Guyana. The company already has four oil projects there, and it plans to invest $12.68 billion in its fifth oil project in that South American nation. The five projects are anticipated to produce 1.2 million barrels per day by 2027. In Guyana so far, Exxon has made more than 30 oil discoveries, which add up to 11 billion barrels of proven crude oil reserves. Guyana expects there are up to 25 billion barrels of oil reserves there, and it will likely auction off more acreage licenses to Exxon Mobil.
In its fourth-quarter report, Exxon revealed that production increased by more than 30% in Guyana and the Permian Basin in 2022, which helped the company achieve strong bottom-line growth. Full-year adjusted earnings jumped 161.3% year-over-year to $14.06 per share, up from $5.38 per share in 2021. Full-year revenue grew 44.8% year-over-year to $413.7 billion. The consensus estimate called for earnings of $13.94 per share on $427.9 billion in revenue.
For the fourth quarter, Exxon reported adjusted earnings of $3.40 per share, which was up 65.9% from $2.05 per share in the same quarter a year ago. Analysts expected earnings of $3.29 per share. Total 4Q revenue rose 12.3% year-over-year to $95.43 billion, topping estimates for $94.67 billion.
Plus, Exxon will pay a first-quarter dividend of $0.91 per share on March 10. All shareholders of record on February 14 will receive the dividend. The stock has a 3.2% dividend yield.
Republican-Backed Stock #2
EOG Resources, Inc. (EOG)
EOG Resources, Inc. (EOG) is one of the biggest oil and natural gas companies in the U.S., with proven reserves of 3.22 million barrels of oil equivalent (MBOE).
The company operates primarily in Texas, with operations in the Permian Basin, Eagle Ford and Barnett Shale, as well as locations in the Sichuan Basin in China and the Port of Spain in Trinidad and Tobago. The company has more than 11,500 drilling locations.
The company has a market capitalization of near $70 billion, making it one of the largest independent oil and gas companies in the world.
For the fourth quarter, adjusted earnings rose 7.5% year-over-year to $1.94 billion, or $3.30 per share, up from $1.81 billion, or $3.09 per share, in the fourth quarter of 2021. Total revenue increased 11.2% year-over-year to $6.72 billion. The analyst community expected earnings of $3.37 per share and revenue of $6.62 billion.
For its fiscal year 2022, EOG Resources reported adjusted earnings of $13.76 per share on $25.7 billion in revenue, which represented 59.8% annual earnings growth and 38% annual revenue growth. Company management noted that it achieved record earnings in 2022, and stated, “EOG is in a better position than ever to play a significant role in the long-term future of energy and deliver value to our shareholders.”
In other words, EOG Resources has a reputation for delivering strong returns to its shareholders and has been a popular investment choice among Republican congressmen for many years.
For example, U.S. Rep. Diana Harshbarger of Tennessee bought her shares of EOG in January 2022. They’ve been up as much as 57% since then.
With a focus on developing new technologies to improve efficiency and reduce costs, EOG Resources is well-positioned for future growth and success.
Republican-Backed Stock #3
CF Industries Holdings, Inc. (CF)
CF Industries Holdings, Inc. (CF) is a leading nitrogen fertilizer company here in the U.S., so it has not only benefited from increased demand domestically but also internationally.
The Russia-Ukraine war has created a strain on fertilizer supplies, as Russia is one of the top fertilizer producers globally – and sanctions against the country have left others scrambling for alternative sources.
The analyst community anticipates that CF Industries business has prospered in this environment.
With a market capitalization of over $12 billion, Deerfield, Illinois-based CF Industries is a major player in the agriculture industry and has been a popular investment choice among Republican members of Congress.
For one, U.S. Rep. Virginia Foxx of North Carolina traded CF four times in 2022, most recently in September.
CF exceeded analysts’ earnings expectations for its fourth quarter on Feb. 15, 2023. The company produced about 2.4 million tons of ammonia in the quarter. Fourth-quarter earnings increased 22% year-over-year to $860 million, or $4.35 per share, up from $705 million, or $3.27 per share, in the same quarter a year ago. Sales rose 2.8% year-over-year to $2.61 billion. Analysts were looking for earnings of $4.30 per share on $2.84 billion in sales.
Full-year ammonia production totaled about 9.8 million tons. CF Industries also achieved full-year earnings of $3.35 billion, or $16.38 per share, which was up 265.3% from $917 million, or $4.24 per share, in 2021. Total 2022 sales were $11.19 billion, or 71.1% annual sales growth. Analysts expected full-year earnings of $1.64 per share on $11.37 billion in revenue.
The company has a strong track record of delivering consistent returns to its shareholders and is well-positioned for future growth, making it an attractive investment opportunity for GOP lawmakers looking to maximize their returns.
Republican-Backed Stock #4
ConocoPhillips (COP)
ConocoPhillips (COP) is one of the largest independent exploration and production companies in the world. In 2021, the company achieved total production of 1.57 million barrels of oil equivalent per day (MBOE/D), and it ended the year with proved reserves of 6.1 billion barrels of oil equivalent. With an extensive energy portfolio that spans 13 countries, ConocoPhillips also transports oil and natural gas around the world through its pipelines, as well as on tankers, trucks and rails.
The Houston-based company has a market capitalization of over $125 billion, making it one of the largest energy companies in the world.
I should add that ConocoPhillips has paid a dividend for a whopping 171-straight quarters, and it has consistently increased its dividend during this time. In fact, ConocoPhillips increased its dividend by 92% in the past five years. Most recently, the company paid a quarterly dividend of $0.51 per share, and it plans to pay a special dividend of $0.70 per share on December 23. The stock has a 2.1% dividend yield.
No wonder it has been a popular investment choice among Republican congressmen for many years.
For example, U.S. Rep. Michael McCaul of Texas purchased Conoco shares on July 5, 2022. For $84.64. On Dec. 31, the stock closed at $118. That could’ve been a 39.5% gain in just the second half of last year.
While Conoco’s fourth-quarter and full-year 2022 earnings fell shy of analysts’ estimates, the company still posted stunning results, provided positive guidance and continued its history of rewarding its shareholders. For the fourth quarter, ConocoPhillips reported adjusted earnings of $3.4 billion, or $2.71 per share, up from $3 billion, or $2.27 per share, in the same quarter a year ago. Analysts expected adjusted earnings of $2.81 per share.
Full-year adjusted earnings soared 116.3% year-over-year to $17.3 billion, or $13.52 per share, compared to $8.0 billion, or $6.01 per share, in 2021. The consensus estimate called for full-year adjusted earnings of $14.00 per share. ConocoPhillips also noted that full-year production came in at 1,738 MBOE/D. At the end of the year, the company had proved reserves of about 6.6 billion barrels of oil.
ConocoPhillips returned $15 billion to shareholders in the form of quarterly dividends, variable return of cash (VROC) and stock buybacks. And it plans to continue to reward its shareholders this year. It will pay a quarterly dividend of $0.51 per share on March 1. All shareholders of record on Feb. 14 will receive the dividend. A VROC of $0.60 per share will also be paid on April 14 to all shareholders of record on March 29.
Looking ahead, ConocoPhillips expects full-year production between 1.76 million and 1.80 MBOE/D. First-quarter production is anticipated to be between 1.72 million and 1.76 MBOE/D.
With a focus on developing new technologies to improve efficiency and reduce costs, ConocoPhillips is well positioned for future growth and success.
Republican-Backed Stock #5
Marathon Oil Corporation (MRO)
Another Houston-based company, Marathon Oil Corporation (MRO), is an independent oil and gas company. It has a market capitalization of over $15 billion, making it a major player in the energy sector. Case in point: It operates in several of the top oil and natural gas-producing regions in the U.S., with operations in Eagle Ford, Bakken Shale, the Permian Basin and STACK/SCOOP. The company anticipates that it will produce between 285 MBOE/D and 290 MBOE/D this year.
Recently, Marathon Oil announced that it would acquire 130,000 net acres in Eagle Ford from Ensign Natural Resources. The area is anticipated to produce 67,000 BOE/D in the fourth quarter. The deal is expected to close by the end of the year, with an effective date of October 1.
The company has a reputation for delivering strong returns to its shareholders and has been a popular investment choice among Republican members of Congress for many years.
U.S. Rep. Foxx, for example, recently bought MRO at $30.45.
Marathon posted fourth-quarter and full-year 2022 results on Feb. 16. The company noted U.S. production totaled about 278,000 barrels of oil equivalent per day (BOE/D), with oil production of 156,000 barrels per day. Fourth-quarter adjusted earnings came in at $563 million, or $0.88 per share, which topped estimates for $0.84 per share.
For its fiscal year 2022, Marathon Oil reported earnings of $3.61 billion, or $5.26 per share. Adjusted earnings per share were $4.48, which was just shy of estimates for $4.56 per share. Marathon Oil also noted that its proved reserves at the end of 2022 totaled 1,338 million BOE/D, up 21% from the end of 2021.
Like most energy companies, Marathon Oil also pays a quarterly dividend. The company recently paid a fourth-quarter dividend of $0.09, up 50% from the $0.06 per share that it paid in the same quarter last year. The stock has a 1.3% dividend yield.
With a focus on developing new technologies to improve efficiency and reduce costs, Marathon is well positioned for future growth and success.
There’s Always a Bull Market Somewhere
There’s always a bull market somewhere – and right now the bulls are piling into energy stocks. The five top stocks we discussed today fit this description to a “T” and are great bets for your money in 2023.
I hope you found this special report useful. Before we go, let me remind you that you’re now also a member of my free Market 360 newsletter.
In Market 360, we discuss a variety of topics, ranging from the latest happenings in the markets to updates on stocks, earnings, exciting new trends and much, much more. Keep an eye on your email inbox for my next Market 360 article soon. I typically send them every Tuesday, Thursday, Friday and Saturday.
In the meantime, you can check out the Market 360 archive by clicking here.
And if you haven’t yet, I recommend giving Portfolio Grader and Dividend Grader a spin. These are incredibly powerful tools that individual investors can use to help find the best stocks… as well as which stocks to stay far away from.
Sincerely,
Louis Navellier
