It’s been a rough start to 2022 for the US stock market. Concerns about growing Omicron issues and faster-than-expected rate hikes put the S&P 500 Index in a 3.6% gap just one week into the new year.
However, not all sectors performed badly. Energy and financial stocks have had a great start thanks to high oil prices and rates, respectively. Most of the names that have already published double-digit relative returns belong to these sectors.
With the current tailwinds likely to support outperformance early in 2022 for some time, momentum investors may have a chance to strike while the iron is hot – but not too hot. These are the three winners in one week who seem to be enjoying a lot of upside.
What is a good oil services stock?
Liberty Oilfield Services (NYSE: LBRT) It came out swinging in the first two trading days of the year on its way to gains of 25% one week. With the mid-cap hydraulic fracturing services provider still trading well below the post-pandemic peak and favorable energy sector dynamics likely to persist, it is likely that operation is just beginning.
There are many onshore oil and gas service providers in North America, but Liberty Oilfield Services stands out due to its wide geographical reach. Early last year, the company acquired OneStim, the hydraulic fracturing company formerly owned by industry giant Schlumberger. This greatly increased Liberty’s presence in the major basins of the United States and Canada at a time when oil cracking activity was taking off.
For this year, economists expect crude oil prices to remain elevated and supportive of increased production activity. However, Liberty and its peers will face industry-wide supply chain challenges and cost inflation pressures, not to mention recent concerns about Omicron’s impact on global oil demand. However, analysts expect the company to return to profitability in 2022. Look for the stock’s trend back in its teens in anticipation of some stronger quarterly results.
Is Citizens Financial Group Buying Stock?
Regional Bank of Rhode Island Citizens Financial Group (NYSE: CFG) He started the new year in style by rising to an all-time high last week. It is involved in a sector not usually associated with high stock performance, but given the recent trajectory of US interest rates, this could be a solid momentum game.
Ten days into 2022, the 10-year Treasury yield surged to its highest level since January 2021. This is because the market believes that the Fed will tighten monetary policy as soon as March based on the minutes of the last FOMC meeting. The prospect of faster rate hikes prompted investors to bid for well-run regional banks such as Citizens Financial which jumped 15% to start the year.
Citizens are expected to be among the biggest beneficiaries of the price hike due to their strong commercial banking business. The company’s target market includes a wide range of business clients by size and industry including exposure to some of the fastest growing sectors such as technology, energy, healthcare and real estate.
While much of the attention is focused on price hikes, citizens deserve more attention at the expense of recent mergers and acquisitions that have lessened their dependence on traditional banking revenue. Last month, it announced an agreement to buy private investment banking firm DH Capital to bolster its corporate advisory arm. A month ago, it finalized its acquisition of capital markets firm JMP Group to enhance its capabilities in strategic advisory services, equity research and trading.
Citizens Financial Group is trading near a record low, but with last year’s 10x earnings and more diversified revenue streams ahead, it seems like a wise investment here.
Will Ford Motor stock continue to rise?
Ford Motor (NYSE: F) I’m out of the gate with 20% through January 7y. The stock went into overdrive due to a pair of powerful press releases that cemented the automaker’s influence in the electric vehicle (EV) space.
First, Ford announced that it plans to double annual production of its F-150 Lightning electric truck to 150,000 units. The move came in response to increased customer demand for the popular high-mileage vehicle, which is scheduled for delivery this spring. Ford is also seeing “unprecedented demand” for its Mustang Mach-E and will also ramp up production of that electric car this year.
In the wake of this acceleration, Ford announced that it sold a record 12,284 EVs in December. This capped a strong year for the company’s electric car division, which trailed only Tesla in terms of full-year sales volume. Much of the growth has been tied to sales of the Mustang Mach-E, but with the F-150 Lightning and E-Transit all-electric truck due to roll off the assembly lines this year, the Ford EV platform will only gain momentum in 2022.
The market continues to catch up with Ford’s assessment. The stock finished 2021 in a five-month winning streak that appears poised to extend to six. At 12 times earnings this year, Ford remains one of the most underappreciated ways to invest in electric vehicle growth.