XLE Breaks 2022 Highs: 10 Energy Stocks Outpacing the Market - Ready for Energy Surge?

The energy stock market has witnessed a significant surge, with the $Energy Select Sector SPDR Fund(XLE)$ surpassing its 2022 highs, reaching $98.47 per share yesterday.

Surprisingly, energy stocks have outperformed the S&P 500 index this year, with $Marathon(MPC)$ leading the pack with an impressive surge of 42.21%.

The chart below shows energy stocks that outperformed the market:

Amidst the escalating tensions in the Middle East and the onset of the election season, it makes sense to engage in some tactical energy trading alongside existing investments in oil and gas.

Currently, energy traders anticipate a squeeze on summer oil deliverable supply, leading to a sharp depletion in inventories. This is reflected in spot prices and calendar spreads. In essence, they anticipate an upward trajectory in summer oil prices.

$Energy Select Sector SPDR Fund(XLE)$

The Energy ETF provides the simplest route to augmenting energy investments. Holding 26 companies, including oil majors, midstream and oilfield services firms, as well as several prominent oil and gas exploration and production companies.

Another approach involves selling cash-secured put options on XLE. By selling cash-secured put options, you can collect premiums while maintaining cash in an interest-bearing money market account.

Your risk is if the basket price declines, you are obligated to purchase XLE at your chosen strike price. By selling put options instead of directly purchasing XLE, you also forego the potential appreciation in XLE above the premium collected.

$Marathon(MPC)$

Marathon Petroleum, a major player in the downstream energy sector, has seen strong financial performance and shareholder value.

The company anticipates continued robust demand for oil, favorable refining margins, and plans to invest in low-carbon initiatives.

MPC's refining business remains undervalued and can produce annual returns of 15% or more.

$Valero(VLO)$

Valero Energy is a leading U.S. oil refiner, processing petroleum into various products through a capital-intensive and profitable process.

Crack spreads measure the price differential between crude oil and oil products and are real-time indicators of petroleum demand and refining earnings.

Gasoline crack spreads have been trending higher, while distillate cracks have declined but remain elevated. Valero should benefit from the processing margins leading to another earnings beat.

$Phillips 66(PSX)$

On Wednesday, April 3rd, Phillips 66 announced a 10% increase in its quarterly dividend to $1.15, resulting in a 2.7% yield for shares.

This move aligns with the company's robust cash generation and commitment to returning at least 50% of operating cash flow to investors through dividends and buybacks.

This strategy has rewarded shareholders, with the stock climbing by approximately two-thirds over the past year to reach new all-time highs.

$Canadian Natural Resources(CNQ)$

The start-up of the Trans Mountain pipeline will have a positive impact on Canadian oil prices, benefiting Canadian Natural Resources.

$Suncor(SU)$

Suncor Energy predicts 6% production growth in 2024 and expects stronger refinery utilization.

Once price breaks back above the $35.50 level, it will be further confirmation of the primary count shown. Ultimately, the overhead target is possibly as high as the $55 region.

Will you add to your position during the two-day pullback? Which one?

Or do you think the rally is over?