By Keren Gelfand
The last five years have been favorable for stocks; the average annual compound return for the past five years of the S&P 500 index has been an astounding 16.04%. This year the U.S. stock market is continuing its rally, with the S&P 500 index rising 7.03%, year to date (July 18, 2014). Entering third quarter, let's find out which companies and which sectors were the best and worst performers over the past six months.
The table below presents the 25 best performing stocks for the last six months; the total-returns calculation for this period is taking into account also dividends.
Among the twenty-five best performing stocks, nine companies are from the energy sector, including the best performer, Newfield Exploration Co. (NYSE:NFX), which gained 75.9% in the last six months.
In Part I of this report, we will take a look at top expert consensus for energy sector stocks to determine if they are still bullish on the sector.
Will the energy sector continue to rally in the second half of the year? Let's study what top experts think about the prospects of the sector. In order to do this, we have summarized the latest recommendations of experts, with four or five star rating according to TipRanks, on the five U.S. largest energy companies.
The table below presents the number of recommendations of the top ranked analysts according to TipRanks.
The average percentage of "Buy" recommendations of 63.6% shows that top analysts are still bullish on the energy sector. However, one must considering that analysts generally give much more "Buy" recommendations (averaging around 86.5%). As such, these results do not represent particular enthusiasm among the top analysts.
The table below presents the number of recommendations of the top bloggers according to TipRanks.
The extremely high average "Buy" recommendation of 95.6% demonstrates that top bloggers are still very bullish on the energy sector.
Individual Expert Recommendation
Since the best performers have been stocks from the energy sector, let's study how top experts view the prospects of the largest S&P 500 energy company: Exxon Mobil (NYSE:XOM).
According to TipRanks, among the analysts covering XOM stock, there are five analysts who have the four or five star rating, three of whom recommend the stock, and two top analysts have issued a Hold rating.
On May 8, Argus analyst Michael Burke recommended XOM stock. Mr. Burke explained, "We are maintaining our BUY rating on Exxon Mobil Corp. and boosting our target price to $114 from $104. Our higher target reflects our positive view of management's planned reduction in capital spending, which should boost free cash flow going forward. We also like the company's plan to increase profitability in the upstream segment by focusing on higher-margin production and by increasing the percentage of production from liquids from a current 52% to 69% by the end of 2017."
Financial experts agree that the energy sector has a chance to stay on top!