Investing in Oil Stocks is the Ideal Counterbalance to Nvidia and Other Major Tech Companies

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Oil and technology stocks have been performing well in the market recently. Big tech has been driving significant gains, with the SPDR technology sector ETF outperforming the S&P 500 by 35 percentage points since November 2022. However, as the tech sector now represents a third of the market and is trading near its highest valuation in over 20 years, diversifying investments seems like a wise idea. Oil stocks, on the other hand, have not been as strong, with the Select Sector Energy SPDR ETF rising just 8.7% in 2024. Despite this, oil stocks may complement tech stocks well.

Oil stocks have a low correlation with tech stocks, making them a potential hedge if the tech sector falters. Energy stocks have shown signs of strength, with the Energy ETF holding its 200-day moving average and potentially starting a new leg up. Price stability and potential growth in oil prices could further boost the performance of oil stocks. JP Morgan strategists predict an average of $84 for Brent crude in the third quarter of 2024, with a peak of $90 possible in August or September.

Exxon Mobil, a key player in the energy sector, has been highlighted as a strong investment option. UBS analyst Josh Silverstein named Exxon Mobil the “best stock to own over the next five years” due to its growth potential and financial strength. Exxon Mobil’s cost reductions, new oil projects, strong balance sheet, and low-carbon investments could drive profit growth and stock price appreciation.

Overall, while tech stocks have been performing well, diversifying with oil stocks could be a smart move. Oil stocks have shown resilience and potential for growth, especially if oil prices continue to rise. Exxon Mobil, in particular, has been identified as a promising investment with the potential for significant upside. Partnering oil and technology stocks could provide a balanced and potentially profitable investment strategy in the current market environment.

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https://www.barrons.com/amp/articles/exxon-stock-price-oil-nvidia-big-tech-dee8fcd8