Energy stocks are becoming an attractive option as investors pivot away from the saturated growth sectors, notes a prominent Wall Street expert.

“The tech trade is still highly overvalued at this time,” Lori Calvasina, RBC Capital Markets head of US equity strategy, shared with Yahoo Finance Live on Tuesday. “The leadership areas [stocks] are tired and need to take a break.”

She continued, “I agree that longer term that’s [growth trade] where you want to be from a fundamental perspective, but we’ve just got to go through a correction there. Money is going to rotate into these value-oriented sectors, and I think energy is giving you one of the best alternatives.”

Industry analysts are optimistic about the energy sector’s performance this quarter, especially with oil prices having risen around 29% since late June. The S&P 500’s Energy Select ETF (NYSE:XLE) saw a boost of over 2% on Tuesday, while tech stocks experienced a decline.

Calvasina further observed, “We’re starting to see energy do what tech was doing at the beginning of the year —exiting that downward revision cycle but it’s still very early days.”

To put things into perspective, the Information Technology XLK ETF (NYSE:XLK) has surged by 40% since the start of the year, a significant lead compared to XLE’s 6% rise.

Oppenheimer’s chief investment strategist, John Stoltzfus, sees the recent ascent in oil prices to 2023 peaks as a lucrative opportunity in the equities market.

He noted, “We find the S&P 500 energy sector looking increasingly attractive as policymakers in the US and abroad strive to contain inflation and manage economic growth.”

Additionally, Oppenheimer forecasts favorable prospects for the energy domain amidst the US’s thrust towards infrastructure endeavors and semiconductor manufacturing.

Tuesday’s market update showed West Texas Intermediate prices hovering just shy of $89 per barrel. Meanwhile, Brent crude futures stood strong, surpassing the $91 per barrel mark.

Here’s a look at some of the fast-moving energy stocks for 2023:

First Solar (NASDAQ:FSLR)

• Specializes in manufacturing and selling efficient, high-performance solar panels.
• Although it recently reduced its 2022 guidance due to profitability inconsistency, the company’s strong balance sheet and potential benefits from US solar manufacturing incentives make it noteworthy.

Enphase Energy (NASDAQ:ENPH)

• Produces solar energy converters and storage systems.
• Transitioned from years of losses to consistent profitability since 2019.
• Favored for its superior gross margins and brand reputation in the residential solar market.

Constellation Energy Group (NYSE:CEG)

• Supplies carbon-free energy from diverse sources like nuclear, wind, and solar.
• Despite recent financial losses, it’s favored for its strong balance sheet and pivotal role in the clean energy domain.

Occidental (NYSE:OXY)

• Engages in the exploration and development of oil and gas properties.
• After facing challenges post a significant 2019 acquisition and a tough 2020, OXY is on the recovery path with reduced debt and an increased dividend.
• Warren Buffett’s investment has boosted its reputation, making it a notable stock in the energy sector.

Valero (NYSE:VLO)

• Refines petroleum to produce various fuels.
• Impressed in 2022 with net income far exceeding that of the previous year, analysts appreciate Valero for its asset quality and margins.

Marathon Petroleum (NYSE:MPC)

• Focuses on refining, marketing, and distributing petroleum products.
• Recent favorable industry conditions and strategic divestitures have fortified its financial standing.

Hess (NYSE:HES)

• Involved in the exploration and production of crude oil and gas.
• Showed remarkable improvement in net income from 2021 to 2022.
• Has a promising stake in a resource in Guyana, ensuring diversified exposure and potential protection from restrictive U.S. policies.

EQT (NYSE:EQT)

• • Specializes in producing natural gas and related liquids.
  • Despite inconsistent profitability, the company’s commitment to debt reduction and shareholder value is commendable.

Exxon Mobil Corporation (NYSE:XOM)

• • A global leader in the exploration and production of crude oil and natural gas.
  • Boasts the elite Dividend Aristocrat status and doubled its GAAP earnings from 2021 to 2022.
  • Benefits from a vast scale, diversified assets, and an aggressive share repurchase plan.

Schlumberger Limited (NYSE:SLB)

• Offers a comprehensive range of services to oilfields.
• Recorded significant revenue and EPS growth in 2022.
• Known for creating efficiencies for well operators and consistently invests in research and development to remain a front-runner in oilfield services.

All these companies, despite facing the inherent challenges and cyclical nature of the energy sector, showcase significant potential and have unique strengths that could make them favorable investment options. As always, it’s crucial to conduct thorough research and perhaps consult with a financial advisor before making investment decisions.

Featured Image – iStock bymuratdeniz

Please See Disclaimer