Energy Stocks Beat the Market by a Wide Margin as Vanguard ETF Delivers 93% Return
The Vanguard Energy ETF (VDE), a broad benchmark for the energy sector, has returned 93.61% over the past 12 months, more than quadrupling the S&P 500's total return of 23.88% over the same period, according to a Benzinga analysis by Ryan Peterson. The gap underscores a sustained run for traditional energy producers that has drawn renewed investor attention to names including Exxon Mobil, Marathon Petroleum, Chevron Corp. and ConocoPhillips.
Key takeaways
- The Vanguard Energy ETF (VDE) returned 93.61% over the past 12 months, more than quadrupling the S&P 500's 23.88% total return over the same period.
- The energy sector's outperformance, per a Benzinga analysis by Ryan Peterson, has drawn renewed investor attention to names including Exxon Mobil, Marathon Petroleum, Chevron Corp. and ConocoPhillips.
- The energy sector gained 54% in 2022, and Benzinga noted analysts broadly expect it can climb at least 20% further without specifying a timeframe.
- Benzinga's stock-screening methodology sorted candidates by four criteria: value, growth, momentum and trending (search-volume) measures.
- The sector splits into nonrenewable companies (coal, natural gas, oil) operating on finite resources and renewable operators using solar, wind and hydropower.
The Vanguard Energy ETF (VDE), a broad benchmark for the energy sector, has returned 93.61% over the past 12 months, more than quadrupling the S&P 500's total return of 23.88% over the same period, according to a Benzinga analysis by Ryan Peterson. The gap underscores a sustained run for traditional energy producers that has drawn renewed investor attention to names including Exxon Mobil, Marathon Petroleum, Chevron Corp. and ConocoPhillips.
What Drives the Sector's Performance
The energy sector spans companies involved in the production, exploration, refining and transportation of consumable fuels such as coal, oil and natural gas, as well as businesses that supply drilling equipment, oil rigs and related services. The sector also includes a renewable wing — companies generating revenue from solar, wind and hydropower — though the outperformance cited in the Benzinga analysis reflects the broader VDE benchmark, which covers both categories.
Energy stocks posted a 54% gain in 2022, and Benzinga noted that analysts broadly expect the sector can climb at least 20% further from current levels, without specifying a timeframe or naming the analysts behind that view.
How to Evaluate an Energy Stock
Benzinga's methodology sorted candidates across four criteria: value stocks were screened using forward price-to-earnings, current P/E and price-earnings-to-growth multiples; growth stocks were ranked by earnings and revenue growth weighted equally; momentum was measured by 52-week price performance; and trending names were identified by search-volume increases on the Benzinga platform.
For individual investors assessing names within the sector, Peterson's piece highlighted three core metrics. Earnings per share measures company profitability against the outstanding share count. The P/E ratio signals whether a stock is overpriced or undervalued, with lower ratios historically associated with greater return potential. Dividend yield is particularly relevant in energy, where many companies distribute quarterly or annual dividends — tracking those payout rates each quarter helps gauge income potential.
Two Paths: Fossil Fuels vs. Renewables
The sector divides cleanly into nonrenewable and renewable camps. Nonrenewable energy companies — those producing and distributing coal, natural gas and oil — operate on finite resources. Renewable operators generate revenue from effectively unlimited sources including solar, wind and hydropower.
Benzinga's analysis noted that climate-change pressures could accelerate a resurgence in clean energy stocks, though no specific timeline or catalyst was identified. Energy companies of both types are also distinguished by their tendency toward consolidation: mergers and acquisitions can rapidly alter a holding's value, making it important to monitor not only fundamentals but also deal activity in the space.
The sector's outperformance relative to the broader market continues to attract capital, with the VDE's trailing 12-month return more than three times greater than the S&P 500's gain — a spread wide enough to keep the energy trade in focus even as investors weigh longer-term questions about the energy transition.