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4 Top Performing Energy ETFs & Stocks of 2016

The energy segment was on a roller coaster ride in 2016, with oil price dipping to 12-year lows in mid-February and then spiraling back to the above $50-per barrel mark. In fact, oil prices logged in the biggest annual gains since the financial crisis with Brent and WTI rising 52% and 45%, respectively, primarily driven by the historic output cut deal that could end the two-year crude-oil rout and stabilize the oil market.

The OPEC, which accounts for one-third of the global output, pledged to cap its oil production for the first time in eight years. The 14-member cartel is expected to reduce production by 1.2 million barrels per day from the current 33.6 million barrels for six months starting in January 2017. Saudi Arabia, the largest oil producer, will bear the brunt the most with a cut of almost 500,000 barrels per day (read: 6 Biggest ETF Stories of 2016 Worth Watching in 2017 ).

The second largest producer - Iraq - which had previously resisted cuts, also agreed to curtail production by 200,000 barrels per day. This was followed by output reductions of 139,000 barrels per day for United Arab Emirates, 131,000 barrels per day for Kuwait and 95,000 barrels per day for Venezuela. Meanwhile, non-OPEC member Russia also decided to forego 300,000 barrels per day of oil output to prop up oil price.

Talks of the deal fueled a rally in the oil prices since February 2016 with many expecting prices to move up to $60 per barrel this year. Additionally, non-OPEC members including Russia also agreed to cut 558,000 barrels per day for six months starting January 1 with the scope of renewal of the deal for another six months. However, a strong dollar and any non-compliance of the deal would weigh on the oil price in the New Year.

Given that robust trading in oil is likely to continue in 2017, investors might want to tap the space with the top performing energy ETFs and stocks of 2016. For them, we have highlighted four funds and stocks that are poised to perform well in the New Year, should oil price rise or remain above $50 per barrel.

Best ETFs

All these funds have a favorable Zacks ETF Rank of #3 (Hold) suggesting more room for upside (see: all the Energy ETFs here ).

VanEck Vectors Unconventional Oil & Gas ETF FRAK

This ETF offers exposure to companies involved in the exploration, development, extraction, and production of unconventional oil and natural gas by tracking the MVIS Global Unconventional Oil & Gas Index.

AUM: $59.3 million

Expense Ratio: 0.54%

1-Year Return: 37.3%

S&P Oil & Gas Exploration & Production ETF XOP

This fund targets the oil and gas exploration and production corner of the broad energy space, and follows the S&P Oil & Gas Exploration & Production Select Industry Index (read: OPEC Finally Cuts Output: Energy Stocks & ETFs Up 10% or More ).

AUM: $2.4 billion

Expense Ratio: 0.35%

1-Year Return: 37.1%

PowerShares DWA Energy Momentum Portfolio PXI

This fund offers exposure to companies having relative strength (momentum) by tracking the Dorsey Wright Energy Technical Leaders Index.

AUM: $278.7 million

Expense Ratio: 0.60%

1-Year Return: 29.6%

SPDR S&P Oil & Gas Equipment & Services ETF XES

This fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of the companies engaged in the oil and gas equipment and services industry.

AUM: $312.6 million

Expense Ratio: 0.35%

1-Year Return: 27.5%

Best Stocks

We have highlighted the best performing stocks that currently have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3.

Resolute Energy Corporation REN

Based in Denver, Colorado, Resolute Energy is an independent oil and gas company engaged in the acquisition, exploitation, exploration, and development of oil and gas properties in the United States.

Zacks Rank: #2

VGM Style Score: C

Market Cap: $904.2 million

1-Year Return: 865.6%

Pioneer Energy Services Corp. PES

Based in San Antonio, Texas, Pioneer Energy is the provider of land-based drilling and production services to oil and gas exploration and production companies in the United States and Colombia (read: How to Bet on Oil with Leveraged ETFs ).

Zacks Rank: #3

VGM Style Score: D

Market Cap: $547.7 million

1-Year Return: 215.6%

Emerge Energy Services LP EMES

Based in Southlake, Texas, Emerge Energy is engaged in owning, operation, acquisition and development of energy service assets primarily in the United States.

Zacks Rank: #3

VGM Style Score: F

Market Cap: $359.1 million

1-Year Return: 206.6%

Enerplus Corporation ERF

Based in Calgary, Canada, Enerplus is engaged in the exploration and development of crude oil and natural gas in the United States and Canada.

Zacks Rank: #3

VGM Style Score: F

Market Cap: $2.29 billion

1-Year Return: 193.2%

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ENERPLUS CORP (ERF): Free Stock Analysis Report

RESOLUTE ENERGY (REN): Free Stock Analysis Report

EMERGE ENRG SVC (EMES): Free Stock Analysis Report

PIONEER EGY SVC (PES): Free Stock Analysis Report

SPDR-SP O&G EXP (XOP): ETF Research Reports

PWRSH-DW EGY MO (PXI): ETF Research Reports

VANECK-UNC O&G (FRAK): ETF Research Reports

SPDR-SP O&G EQP (XES): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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