2022 was a dismal year for investors. Many large-cap stocks have posted double-digit losses. The only exception was the energy sector, which drove massive gains to its investors, as the Russian-Ukrainian conflict drove oil prices higher for most of 2022.
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Oil companies including ExxonMobil (NYSE: XOM) and Chevron (CVX) are set to reap rich profits for 2022 and could together rake in $100 billion, according to a Financial Times report citing Wall Street estimates compiled by S&P Capital IQ.
CVX and XOM have seen their stocks soar by more than 50% and 70%, respectively, in the past year.
According to these estimates, while Exxon is likely to report more than $56 billion in profits in 2022, Chevron could exceed $37 billion. According to the Financial Times, this could be record highs for both companies.
Investors stand to benefit from these record breaking results as Exxon has stated that it plans to buy back stock worth $50 billion until 2024. This also includes its stock buyback of around $15 billion earlier. Last year, XOM raised its dividend for the 40th consecutive year and its dividends have grown at a rate of 5.9% over the past 40 years.
In comparison, Chevron expects to buy back about $15 billion of shares.
Besides raising the stock buybacks, XOM and CVX have also reiterated or upped their capex plans even as President Joe Biden has called for oil companies to boost production in order to bring down prices at the pump.
Analysts are cautiously optimistic about XOM stock with a Moderate Buy consensus rating based on nine Buys and six Holds.
EV Major TSLA is Struggling
While traditional energy behemoths like XOM and CVX did pretty well in 2022, EV stocks have been struggling, especially EV giant Tesla. The stock lost more than 65% in 2022.
A major reason for the stock’s nosedive were that investors have been concerned about TSLA’s car sales as recession looms and Musk gets distracted by his acquisition of Twitter.
Another factor has been that TSLA’s sell-off has been sparked by taxes. Not Tesla’s taxes so much as investors’ taxes. Selling a stock that’s been in free fall is a good way to realize capital losses.
However, top-rated Piper Sandler analyst Alexander Potter remains bullish about TSLA stock and believes that the EV major’s market share is unlikely to “suddenly succumbing to a wave of new competition.”
Potter is optimistic about TSLA’s long-term thesis and believes investors “should stay grounded in the data” for each of Tesla’s major regions.
The analyst has a price target of $340 on the stock, implying an upside potential of 176.1% at current levels.
Analysts are cautiously optimistic about TSLA with a Moderate Buy consensus rating based on 19 Buys, 10 Holds, and two Sells.
Concluding Remarks
It does not look like TSLA’s woes are going to end anytime soon with a tough macroeconomic environment and rising competition from other EV players. Musk should heed the call from investors and analysts alike to hire another CEO to run TSLA.
On the other hand, XOM and CVX have flourished in a difficult environment and with a harsh macroeconomic situation behind the corner, could very well beat TSLA in 2023.
