Experts say energy stocks can repeat their stellar 2022 performance

Energy is the best performing sector year-to-date. The S&P 500 Energy ETF XLE is up 62%, far surpassing any other equity group in 2022.

In the continuation of our series What to do in the bear market, we asked the experts if oil and gas stocks can repeat their spectacular performance next year. Here is what they said.

Can energy stocks match or exceed their 2022 performance next year?

Energy is up almost 65% YTD in a market that is down 15%. That is a pretty heady performance, and it is asking a lot for a repeat, whether you want to view that on an absolute or relative basis. That said the sector could do well again, maybe just not that well, according to Stewart Glickman, energy equity analyst at CFRA Research.

Louis Navellier, the founder and chief investment officer of Navellier Associates, said he expects energy prices to rise in spring.

In the spring, I expect crude oil to hit $120 per barrel due to seasonal demand and Biden will likely stop draining the Strategic Petroleum Reserve, so XLE XLE has a long way to run, said Navellier.

We like a lot of names for buying or holding, and our expectation is that oil prices will be good in 2023 somewhere in the $90 b range, which seems reasonable to us on a fundamental basis. The top picks are EOG Resources EOG Schlumberger SLB and Targa Resources TRGP All are Strong Buys 5 -- STARS said Glickman of CFRA Research.

Louis Navellier said his holdings for clients and family include BP BP Blackstone Minerals BSM ConocoPhillips COP Occidental Petroleum OXY and Crescent Point Energy CPG.

Josh Young, Chief Investment Officer for Bison Interests tells Yahoo Finance, Low Valuation, small cap oil gas producer equities like Journey Energy JOY.TO and Sandridge SD that they are well positioned to beat in 2023. In smaller companies, the risk is often in management and balance sheets. Both companies have strong balance sheets. Sandridge has a large portion of its market cap in net cash. In the past two years, both companies surprised the upside with better than expected results and highly accretive acquisitions, said Young.

Russian production and exports are close to where they were before the war, so the conflict ending wouldn't have a significant effect on supply from here. Young says that rebuilding Ukraine will be very energy intensive.

China re- opening is inevitable and will be energy intensive, with 2 million barrels per day of demand recovering to pre-lockdown levels before accounting for continued demand growth from their large population and growing per capita energy consumption. He added that the oil market will likely remain under-supplied in this scenario.