Vanguard Energy ETF is up 45% YTD: what’s next?

on May 23, 2022
  • The Vanguard Energy Index Fund ETF (VDE) is up 45% YTD at present.
  • Bryn Talkington explains why energy stocks could go further up from here.
  • Oil prices remain well above $100 amidst the ongoing war in Ukraine.

Continue holding energy stocks because they’ll likely go further up from here, says Requisite Capital’s Bryn Talkington. The Vanguard Energy Index Fund ETF is already up 45% year-to-date.  

Energy will contribute 18% to S&P bottom-line this year

Talkington agrees that “Energy” is trading at levels not seen in the last two decades, but views the ongoing war in Ukraine as a strong enough tailwind for the sector to remain resilient. On CNBC’s “Halftime Report”, she added:

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Energy, a year and a half ago, was about 2.80% of the S&P. Right now, it’s about 4.80%. This year, energy will contribute $18 to the S&P’s bottom-line, close to 18%. So, I think the earnings are real there and the returns, therefore, are justified.

According to Pioneer Natural Resources, oil will likely remain above $100 a barrel in the next couple of years as Russian energy goes off the market.

Other reasons why Talkington is bullish on energy stocks

Talkington still dubs “Energy” as attractively inexpensive relative to the S&P, which adds to her reasons for being positive on the space. Speaking with CNBC’s Scott Wapner, she said:

I see people getting sceptical but remember that you do get great dividends in energy stocks, even if you didn’t get much capital appreciation. Devon is still paying 8.0% dividend. I’ll take that all day long even if Devon does nothing.

Earlier in May, Devon Energy reported mixed results for its fiscal first quarter. The stock is up more than 50% versus the start of the year 2022.  

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