These are the most successful petroleum stocks in 2023

Great performance and stocks may seem like contradictory terminology this year. Despite double-digit losses from major indexes last year, and subpar gains so far in 2023, there are still some individual stocks that have generated sizable gains over the period. One has managed some impressive growth over the past two years when it comes to price performance. Most investors should consider other alternatives, according to the pros.

Morningstar data shows that the Houston-based hydrocarbon exploration company Occidental Petroleum Corp., or OXY, has increased its price performance by 84% since March 2020. The stock has lost 1.3% so far in 2023, but that doesn't stop famed investor Warren Buffett from adding shares of it to his portfolio. Buffett s Berkshire Hathaway purchased 5.8 million shares of the oil company in three separate trades on Friday, Monday and Tuesday for prices ranging from $59.85 to $61.90, according to a recent SEC filing. His Omaha, Nebraska-based firm has 200.2 million shares of Occidental, worth an estimated $12.4 billion as of Wednesday's close price of $62.15.

Why do petroleum stocks like this one have outperformed the market since 2020? The crude oil price for much of the first half of 2022 has hovered around $100 per barrel. Natural gas has seen an increase since 2020, peaking at $8.81 per million British thermal units, or BTUs, last August, to now $2.38 in February 2023, according to Bloomberg data. The sector is still up from $1.91 in February 2020, despite the fact that it is a significant decline.

If you want to steal a page from Buffett's playbook and cash in on these crazy-high gains, NerdWallet investing spokesperson Andy Rosen has a warning. He said that a stock with a big year-to-date gain would have made you money if you invested at the beginning of the year, but that doesn't mean it's going to pay off if you invest now. You have to make your own analysis about whether the good times are going to continue for the asset you are considering. Peter Krull, CEO, Earth Equity Advisors, said that the ride will come to an end, as a timing game that may be too much of a risk for retail investors. There are a number of people who have made bets on a single stock and benefitted handsomely, but there are just as many who have lost, according to Krull. The most prudent investment principle is to have a diversified portfolio. You can take another page from Warren Buffett's playbook, this one is targeted for most investors. Buffett said a few years ago, the best thing for most people is to own the S&P 500 index fund. He is a believer in thinking long term, at least for most investors. He said if you aren't willing to own a stock for 10 years, don't think about owning it for 10 minutes.

I don't think most people are in a position to pick single stocks, Buffett said at a Berkshire Hathaway annual shareholder meeting in 2020. I think people are much better off buying a cross-section of America and forgetting about it.