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Energy on Track for Its Best Month Ever: 5 ETF, Stock Winners

Amid the latest stock market surge buoyed by COVID 19 vaccine optimism, the energy sector has been on the forefront. Notably, the S&P 500 Energy Index is on track for the best month ever, gaining nearly 40%.

The three companies have released encouraging vaccine results from their late-stage trials. AstraZeneca AZN said its COVID-19 vaccine could be up to 90% effective. Moderna’s MRNA vaccine candidate was 94.5% effective against coronavirus while Pfizer’s PFE trial showed that its COVID-19 vaccine candidate is 95% effective. Additionally, the Food and Drug Administration has issued emergency use authorization for the Regeneron Pharmaceuticals REGN COVID-19 antibody cocktail (read: Energy ETFs Jump on Coronavirus Vaccine News).

The string of positive news has led to bullishness that a vaccine will lead to swift recovery in energy demand next year. Additionally, the expectation that OPEC and its allies will delay an increase in production planned for January have also added to the strength.

Further, the drop in inventories supported the spike in oil price. U.S. crude inventories fell by 754,000 barrels last week, per the latest data from the U.S. Energy Information Administration. Moreover, the improving prospect for the smooth transition of President-elect Joe Biden to White House has been weighing on the U.S. dollar. A weak dollar has been supporting oil price as it makes the dollar-denominated commodity less expensive for foreign buyers.

Apart from these, the energy market has been benefiting from the positive roll yield in the futures market. This is because the oil market is currently in a state of backwardation, where later-dated contracts are cheaper than near-term contracts, for months. Per CNBC article, Brent futures for February delivery were trading about 13 cents above January contracts, the highest since July. This signals that the oil market is tightening and demand is robust, paving the way for an oil rally. This trend is likely to persist at least in the near term, acting as the biggest catalyst for the commodity.

With the bullish backdrop, crude oil prices are trading at their highest levels since early March. WTI crude is hovering around $46 per barrel while Brent is trading at $48 per barrel.

Being one of the best months for the energy sector, we have highlighted the five best performing ETFs and stocks of November. Investors should note that our ranking system takes into account the asset class outlook, which was negative for energy and hence most ETFs in that space had a Zacks Rank #4 (Sell) or 5 (Strong Sell) (see: all the Energy ETFs here).

Best ETFs

VanEck Vectors Oil Services ETF OIH

This fund tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to the companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling.

Zacks Rank: #4
AUM: $664.7 million
Expense Ratio: 0.35%
4-Week Return: 66%

SPDR S&P Oil & Gas Equipment & Services ETF XES

This fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of the companies engaged in the oil and gas equipment and services industry.

Zacks Rank: #5
AUM: $119.3 million
Expense Ratio: 0.35%
4-Week Return: 66%

iShares U.S. Oil Equipment & Services ETF IEZ

This ETF offers exposure to U.S. companies that provide equipment and services for oil exploration and extraction by tracking the Dow Jones U.S. Select Oil Equipment & Services Index.

Zacks Rank: #5
AUM: $66.6 million
Expense Ratio: 0.42%
4-Week Return: 61.1%

Invesco Dynamic Oil & Gas Services ETF PXJ

This product follows the Dynamic Oil Services Intellidex Index, which offers exposure to companies that are engaged in the drilling of oil and gas wells; manufacturing oil and gas field machinery and equipment; or providing services to the oil and gas industry, such as well analysis, platform and pipeline engineering and construction, logistics and transportation services, oil and gas well emergency management and geophysical data acquisition and processing (read: Value or Growth: Which ETFs to Play Ahead?).

Zacks Rank: #5
AUM: $8.5 million
Expense Ratio: 0.63%
4-Week Return: 57.4%

Invesco S&P 500 Equal Weight Energy ETF RYE

This product follows the S&P 500 Equal Weight Energy Index, which equally weights stocks in the energy sector of the S&P 500 Index.

Zacks Rank: #5
AUM: $60.9 million
Expense Ratio: 0.40%
4-Week Return: 51.4%

Best Stocks

FTS International Inc. FTSI

It is a provider of hydraulic fracturing service primarily in North America.

Zacks Rank: #3 (Hold)
VGM Score: D
Market Cap: $92.8 million
4-Week Return: 450.8%

Altus Midstream Company ALTM

It is a pure-play, Permian Basin midstream C-corporation. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Rank: #1 (Strong Buy)
VGM Score: D
Market Cap: $657.2 million
4-Week Return: 321.3%

FuelCell Energy Inc. FCEL

This company designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed power generation.

Zacks Rank: #3
VGM Score: F
Market Cap: $2.6 billion
4-Week Return: 313.1%

SM Energy Company SM

This independent oil and gas company is engaged in the exploration, exploitation, development, acquisition and production of natural gas and crude oil in North America (read: Vaccine Hopes & Divided Government: Sector ETFs to Win).

Zacks Rank: #3
VGM Score: B
Market Cap: $536.2 million
4-Week Return: 234.3%

Transocean Ltd. RIG

It is the world’s largest offshore drilling contractor and leading provider of drilling management services.

Zacks Rank: #2
VGM Score: C
Market Cap: $1.3 billion
4-Week Return: 199.3%

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Transocean Ltd. (RIG): Free Stock Analysis Report
 
Regeneron Pharmaceuticals, Inc. (REGN): Free Stock Analysis Report
 
AstraZeneca PLC (AZN): Free Stock Analysis Report
 
Pfizer Inc. (PFE): Free Stock Analysis Report
 
Moderna, Inc. (MRNA): Free Stock Analysis Report
 
SM Energy Company (SM): Free Stock Analysis Report
 
FuelCell Energy, Inc. (FCEL): Free Stock Analysis Report
 
SPDR S&P Oil & Gas Equipment & Services ETF (XES): ETF Research Reports
 
iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports
 
VanEck Vectors Oil Services ETF (OIH): ETF Research Reports
 
Invesco Dynamic Oil & Gas Services ETF (PXJ): ETF Research Reports
 
Invesco S&P 500 Equal Weight Energy ETF (RYE): ETF Research Reports
 
Altus Midstream Company (ALTM): Free Stock Analysis Report
 
FTS International, Inc. (FTSI): Free Stock Analysis Report
 
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