Energy Stocks Outperform S&P 500 with 94% Annual Gain in VDE ETF
0h ago|5 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
energy-stocksoil-stocks
Fazen Markets Editorial Desk
Collective editorial team · methodology
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The Vanguard Energy ETF (VDE), a broad proxy for the traditional energy sector, delivered a total return of 93.61% over the 12 months leading to early August 2026, according to a Benzinga analysis. This performance significantly outpaced the S&P 500 index, which returned 23.88% over the same period. The sector comprises companies involved in fossil fuel production, exploration, refining, and transportation, including industry giants like Exxon Mobil, Chevron Corp., Marathon Petroleum, and ConocoPhillips.
The energy sector's recent outperformance follows a period of sustained strength, having gained 54% in 2022 according to the source material. This multi-year rally contrasts with a longer history of volatility, where energy stocks often traded as a cyclical bet on global economic growth and geopolitical stability. The current macro backdrop remains sensitive to commodity price swings, central bank policy, and industrial demand. The resurgence aligns with ongoing global demand for consumable fuels, even as investment flows into renewable energy sources accelerate. The immediate catalyst for the sector's strength is not detailed in the source material, leaving the specific driver for the 94% annual gain unaddressed.
Investor interest is bifurcated between nonrenewable and renewable energy stocks. Nonrenewable companies generate revenue from finite resources like coal, natural gas, and oil. Renewable, or clean energy, companies focus on resources like solar, wind, and hydropower. The source notes that developments in climate change may lead to a resurgence of clean energy stocks, but provides no specific performance data for that subsector. The analysis emphasizes that energy stocks are unique due to their potential for rapid growth via mergers and acquisitions, or vulnerability to being acquired.
The headline data point is the 93.61% total return for the Vanguard Energy ETF over a one-year period. This compares directly to a 23.88% gain for the S&P 500 index, representing an outperformance of nearly 70 percentage points. The source material references the strong 2022 performance where energy stocks gained 54%, but does not provide year-to-date figures for 2026 or breakdowns by quarter. No specific price, volume, or market cap data is provided for individual constituent stocks like Exxon Mobil or Chevron.
The methodology for selecting top stocks, as described by Benzinga, screened companies based on distinct criteria. For value, analysts looked for the lowest forward P/E, current P/E, and P/E-to-growth (P/E/G) multiples. For growth, they weighed high earnings and revenue growth equally. For momentum, the screen used price growth over the past 52 weeks. A separate filter for "trending tech" examined stocks with the highest percentage increase in searches on the Benzinga platform. The source does not publish the resultant list of top stocks from this screener.
Key financial metrics for evaluating energy stocks, per the source, include Earnings Per Share (EPS), the Price-Earnings (P/E) ratio, and Dividend Yield. A lower P/E ratio can indicate a potentially undervalued stock, while a stable or growing dividend yield attracts income-focused investors. The article suggests many stocks under $5 tend to have low P/E ratios, but offers no supporting data or examples from the energy sector to confirm this trend.
The extreme outperformance of the Vanguard Energy ETF suggests capital has been heavily allocated to traditional energy companies over the past year. This likely reflects strong underlying profitability from elevated commodity prices, efficient operations, or shareholder return programs like buybacks and dividends. Sectors that rely on energy as a key input cost, such as transportation and heavy manufacturing, may face margin pressure if these trends persist. Conversely, equipment and service providers to energy producers may have experienced correlated revenue growth.
A critical counter-argument is the long-term structural risk posed by the energy transition. While traditional energy has outperformed recently, the source acknowledges that climate change developments may lead to a resurgence for clean energy stocks. This creates a sector dichotomy where future performance may hinge on policy, technology adoption rates, and capital expenditure shifts. The analysis does not quantify the current market share or growth rate of renewable energy companies relative to their traditional peers.
Positioning appears heavily long traditional energy, as evidenced by the ETF's performance. Flow data is not provided, but the 94% return implies sustained buying pressure and possibly short covering. The source notes that some experts believe energy stocks can rise at least 20% more from their August 2026 levels, indicating continued bullish sentiment among a segment of market commentators. The risk for current holders is a mean reversion if the macroeconomic or commodity price environment shifts.
Investors should monitor quarterly earnings reports from major integrated oil companies and independent producers for signs of sustained profitability and guidance. Key dates include the upcoming earnings seasons in late October 2026 and late January 2027. Commodity price catalysts, such as OPEC+ meetings, will directly impact revenue projections for exploration and production companies. The next scheduled OPEC+ meeting is a pivotal event, though its exact date is not specified in the source.
Technical levels to watch include the 200-day moving average for the VDE ETF and key support levels that have formed during its uptrend. A break below major moving averages could signal a change in momentum. For individual stocks, the price levels around their 52-week highs and lows will indicate whether the bullish trend is intact or exhausting. The source does not identify specific price targets or resistance levels for the sector.
The performance gap between energy and the broader market is a critical metric. A narrowing of the spread between VDE's return and the S&P 500's return may signal sector rotation. Monitoring the relative strength index (RSI) for overbought or oversold conditions can provide short-term trading signals. The long-term outlook remains contested between the ongoing demand for traditional fuels and the accelerating investment in renewable energy infrastructure.
The source material does not provide a specific list of recommended stocks to buy. It outlines a methodology used to screen for stocks with the highest growth, greatest value, strongest momentum, and most searches. This screen evaluates metrics like P/E ratios, earnings growth, and recent price performance. Investors would need to apply similar filters using current market data through a broker's stock screener to generate a contemporary list, as the source's specific results are not published.
The article distinguishes between renewable and nonrenewable energy stocks but provides no comparative performance data. It states that renewable energy companies generate power from solar, wind, and hydropower, while traditional companies focus on oil, gas, and coal. The source suggests climate change developments may lead to a future resurgence for clean energy stocks. For direct performance comparison, investors must analyze separate ETFs, such as those tracking clean energy indices, against the Vanguard Energy ETF (VDE).
Energy stocks can be a volatile long-term investment due to their cyclicality and sensitivity to commodity prices. The sector has demonstrated strong performance recently, with a 54% gain in 2022 and a 94% gain in the following year through the VDE ETF. However, the long-term thesis is complicated by the global energy transition. Investors must weigh consistent cash flows and dividends from traditional firms against the growth potential and policy support for renewable companies, making sector allocation a strategic decision.
The traditional energy sector has dramatically outperformed the broad market, but its future path is bifurcated by the global transition to cleaner fuels.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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