Reason? The inflation record in recent decades forced the Federal Reserve to take a much more restrictive stance. The cycle of rates close to 0% ended and this rise hit stocks hard.
Who suffered more? The technological ones. Why? Companies are not valued by their past, but by their future expectations. That is why flows are projected and discounted at a certain rate to arrive at a theoretical price.
Since the Federal Reserve has violently raised the interest rate, the discount is greater and negatively affects stock prices. This effect is more aggressive in technology companies than in more mature and stable companies.
The big winners of 2022 did not come from the side of technology companies. In fact, the only sector that ended positive was energy. All other sectors suffered losses. Although it is worth clarifying that the returns were not even: the technology and communication category suffered much more than sectors such as health, industry and basic materials.
For this reason, below I am going to show you the 7 large companies that have had a formidable 2022. As expected, the majority are from the energy sector, the only winner last year.
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This ranking took into account the shares that make up the S&P 500, with a Market Cap of more than USD 10,000M.
The S&P500 fell 19.4% during 2022 and posted one of its worst years. But these actions showed another reality:
– Merck: is one of the largest pharmaceutical companies in the world and is headquartered in New Jersey. It develops, manufactures and distributes products for human and animal health. Because of the industry in which it operates, it was able to continue to grow and have a great 2022
– Cardinal Health: is an American multinational that provides health care services. Its focus is on the manufacture and distribution of medical products. It supplies more than 75% of US hospitals.
– Chevron: is an American oil company created in California more than 100 years ago. It has large oil and natural gas fields, as well as refineries. It has had a brutal growth in profits over the past year.
– Marathon Oil: is a small company dedicated to the exploration and extraction of oil and natural gas, based in the USA. It has a Market Cap of USD 17,000M, well below Chevron’s USD 343,000M, for example. Therefore, it can be more volatile.
– ExxonMobil: It is the largest US oil company in the world. It was founded in 1870 as Standard Oil. It operates through the Upstream, Downstream and Chemical segments. It has a Market Cap of USD 466,000M.
– First Solar: is a company in the solar industry and is based in the US. Designs, manufactures and sells solar modules that convert sunlight into electricity. He has great potential and this was demonstrated by his actions during 2022.
– Occidental Petroleum: is a company dedicated to the acquisition, exploration and development of oil and gas in the US, the Middle East, Africa and Latin America. It has a small Market Cap (USD 59,000), compared to ExxonMobil and Chevron. Occidental Petroleum became relevant because Warren Buffett acquired a large part of its shares.
What can happen this year? Merck and Cardinal Health are from the health sector, which, in difficult environments, usually defends itself well. However, the rest of the companies are in the energy sector, so they depend heavily on what happens with oil.
So what can happen? It’s a big unknown. After the big rally in early 2022, fueled by the war between Russia and Ukraine, oil began to correct, in line with fears of a recession.
And now? A very important player is China, whose effects of its reopening are unknown. It is a great demander of oil worldwide, so it could push the price up. Although it is worth clarifying that if the global recession deepens, the price could continue to correct. What force will dominate? It will be seen in the coming months.
Inflation is still a big problem. For this reason, I want to leave you a report with 7 actions to take into account in the current context. You can download it at this link: https://informes.cartafinanciera.com/
CEO of Financial Letter
*Note: The material contained in this note should in no way be construed as investment advice or a recommendation to buy or sell any particular asset. This content is for educational purposes only and represents the author’s opinion only. In all cases it is advisable to consult a professional before investing.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
