The S&P 500 posted its worst month in September since the onset of the COVID-19 crisis due to concerns over the resurgence of COVID-19 cases, high inflation, and budget wrangling in Washington. Also, all three major U.S. stock indexes had their worst quarterly performance since the first quarter of 2020.

However, lately, there has been an unprecedented trend between the energy sector and the broader stock market. While the energy sector has been performing well, the S&P 500 is trading lower. The Bespoke Investment Group’s Paul Hickey told CNBC on October 5, “The energy sector is up close to 17% and the S&P 500 is down.” Moreover, according to a FactSet report, more S&P 500 companies have issued positive EPS guidance for the third quarter.

Given this backdrop, it could be wise to add S&P 500 members EOG Resources, Inc. (EOG), Diamondback Energy, Inc. (FANG), and CF Industries Holdings, Inc. (CF) to your watch list. While the index declined last month, these stocks performed well.

EOG Resources, Inc. (EOG)

EOG explores, develops, produces, and markets crude oil, natural gas, and natural gas liquids. Its principal producing areas are New Mexico and Texas in the United States; the Republic of Trinidad and Tobago; the People’s Republic of China; and the Sultanate of Oman. It has total estimated net proved reserves of 3,220 million barrels of oil equivalent.

On August 4, 2021, William R. Thomas, EOG’s Chairman and CEO, said, “Outstanding operating execution, strong well productivity and lower well costs resulted in higher production and lower capital expenditures compared with our plan. We further lowered operating costs while our differentiated marketing strategy captured premium product prices.”

EOG’s total revenue surged 275.2% year-over-year to $4.14 billion in the fiscal second quarter that ended June 30, 2021. The company’s free cash flow grew 445.4% year-over-year to $3.07 billion, while its adjusted net income came in at $1.01 billion, representing a 7% sequential rise. Also, its adjusted EPS came in at $1.73, up 6.8% sequentially.

EOG’s EPS is expected to be $7.63 in fiscal 2021, representing a 422.6% year-over-year increase. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Also, the company’s revenue is expected to increase 59.6% year-over-year to $4.73 billion for the quarter ending December 31, 2021. Over the past year, the stock has gained 138.9% to close yesterday’s trading session at $87.10. It has also gained 22% in September.

Diamondback Energy, Inc. (FANG)

Independent oil and natural gas company FANG focuses on acquiring, developing, exploring, and exploiting unconventional and onshore oil and natural gas reserves. The company’s total acreage position was approximately 449,642 gross acres in the Permian Basin and estimated proved oil and natural gas reserves were 1,316,441 thousand barrels of crude oil equivalent.

On September 17, 2021, FANG announced that it had accelerated its plans to return 50% of Free Cash Flow to stockholders in the fourth quarter of 2021, and the Board of Directors has approved an up to $2 billion share repurchase program. FANG’s CEO Travis Stice said, “Diamondback is accelerating its previously announced capital return program due to continued strong operational performance and improved capital efficiency, a supportive macro backdrop and increasing financial strength.”

FANG’s total revenue surged 275.2% year-over-year to $1.68 billion in the fiscal second quarter that ended June 30, 2021. The company’s adjusted EBITDA grew 18.5% year-over-year to $1 billion, while its net income came in at $328 million, compared to a loss of $2.41 billion in the prior-year period. Also, its EPS came in at $1.71, compared to a loss per share of $15.16 in the year-ago period.

Analysts expect FANG’s EPS and revenue to increase 231.6% and 94.7% year-over-year to $10.08 and $5.48 billion, respectively, in fiscal 2021. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. The stock has gained 237.4% over the past year and 25% in September to close yesterday’s trading session at $104.16.

CF Industries Holdings, Inc. (CF)

CF is engaged in the manufacturing and selling of hydrogen and nitrogen-based products for fertilizer, emissions reduction, clean energy, and other industrial applications worldwide. The company’s principal offerings include anhydrous ammonia, granular urea, and urea ammonium nitrate. It primarily serves cooperatives, independent fertilizer distributors, traders, wholesalers, and industrial users.

On August 9, 2021, CF and Mitsui & Co., Inc. announced a memorandum of understanding to explore the development of blue ammonia projects in the United States. CF’s President and CEO, Tony Will, said, “CF Industries and Mitsui share a belief that blue ammonia will play a critical role in accelerating the world’s transition to clean energy and that demand for blue ammonia will grow meaningfully.”

CF’s net sales increased 31.9% year-over-year to $1.59 billion for the fiscal second quarter that ended June 30, 2021. The company’s adjusted EBITDA grew 22.2% year-over-year to $599 million. Its net earnings came in at $246 million, representing a 29.5% year-over-year increase. Also, its EPS came in at $1.14, up 28.1% year-over-year.

For the quarter ending December 31, 2021, analysts expect CF’s EPS and revenue to increase 327.5% and 60.8% year-over-year to $1.71 and $1.77 billion, respectively. Over the past year, the stock has gained 91.7% to close yesterday’s trading session at $60.43. It also gained 26% in September.

EOG shares were trading at $86.19 per share on Wednesday afternoon, down $0.91 (-1.04%). Year-to-date, EOG has gained 78.04%, versus a 17.17% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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