The Top (and Bottom) Five Stocks of 2022

Occidental Petroleum was the top stock of 2022 in a list loaded with energy firms, while Affirm Holdings led losers a more diverse bottom five.

We tracked the top and bottom five stocks in the Russell 1000 Index by using the highest and lowest year-to-date (YTD) total return through the close of the market on Nov. 29, 2022. The Russell 1000 has dropped 17% over the same period.

Three of the five top stocks were oil and gas companies that got a boost from surging energy prices after Russia's February invasion of Ukraine and a production cut by OPEC+ later in the year, although they have more recently fallen once again. The other two are Constellation Energy Corp. (CEG), a renewable energy company which will likely benefit from federal investment in the industry and Signify Health Inc. (SGFY), whose shares got a boost from a pending acquisition.

Many of the worst-performing stocks of 2022 fell amid amid accelerating inflation and cautious consumers. Growth stocks have been affected by rising interest rates, which lower their value relative to other assets, and an economic slowdown that tends to hit yclical stocks such as those in the bottom five.

Top 5 Stocks of 2022

1. Occidental Petroleum Corp. (OXY)

• Year-to-Date Return: 139.9%
• Sector: Energy
• Market Cap: $62.8B

Occidental Petroleum is an oil and gas exploration and production (E&P) company as well as a manufacturer of petrochemicals. It also has some midstream energy interests. Occidental reported profit of $2.5 billion on net sales of $9.4 billion for the third quarter of 2022. Net income increased by 305% and net sales by 38% year-over-year.

2. Constellation Energy Corp. (CEG)

• Year-to-Date Return: 126.9%
• Sector: Utilities
• Market Cap: $30.9B
  

Constellation Energy is an electricity supplier that mostly uses emissions-free sources such as solar, wind, and nuclear power. It also produces electricity through natural gas. It supplies energy to homes, businesses, governments, and wholesale customers across the U.S. and produces almost 10% carbon-free energy nationwide. Constellation posted a net loss of $193 million for the third quarter, compared with net income of $633 million in the prior-year quarter. Revenue rose 37% to $6.1 billion.

As one of the largest clean energy companies in the U.S., Constellation Energy is positioned to benefit from President Biden's Inflation Reduction Act, signed into law on Aug. 16. Constellation and other green energy firms could get billions of dollars of in tax incentives, infrastructure support, and other perks.

3. Antero Resources Corp. (AR)

• Year-to-Date Return: 111.0%
• Sector: Energy
• Market Cap: $11.1B
  

Antero Resources is primarily an E&P firm with properties primarily in Ohio and West Virginia. It also maintains a significant ownership stake in Antero Midstream, a midstream energy company. Antero reported $560 million in net income for the most recent quarter and losses of $550 million in the prior-year quarter. Net revenue was $2.1 billion, almost four times that of Q3 2021.

4. Texas Pacific Land Corp. (TPL)

• Year-to-Date Return: 104.1%
• Sector: Energy
• Market Cap: $19.3B

Texas Pacific Land generates revenue from land sales, oil and gas royalties, grazing leases, and other ventures. It owns about 880,000 acres of land in Texas as well as various royalty interests for oil and gas development. Texas Pacific reported net income of $130 million and revenues of $191 million in the last quarter, each up 55% on the year.

Oil output in the Permian Basin, where Texas Pacific does business, has reached record levels this year.

5. Signify Health Inc. (SGFY)

• Year-to-Date Return: 101.3%
• Sector: Healthcare
• Market Cap: $6.8B

Signify Health offers healthcare payment programs to governments, employers, health systems, health plans, and physicians to millions of people. Its major customers include the U.S. government's Medicare program. The company announced in September that it would be acquired by CVS Health for about $8 billion, with the transaction expected to close early in 2023. For Q3, Signify had a net loss of $225 million and a 30% decline in revenue to about $140 million.

The shares of a target company in an acquisition often rise substantially, at least in the short term, as the acquiring firm pays a premium on the pre-acquisition share price to persuade shareholders to approve the deal.

Bottom 5 Stocks of 2022

1. Affirm Holdings Inc. (AFRM)

• Year-to-Date Return: -87.3%
• Sector: Technology
• Market Cap: $3.7B

Affirm Holdings is a fintech firm offering payment services to both consumers and merchants. The company's core products are loans provided to customers making ecommerce transactions. Affirm's financial results for the most recent quarter, Q1 FY 2023, include net losses of $251 million, an improvement of $55 million from the same period a year earlier. Revenue climbed 34% to $362 million.

Persistent inflation, interest rate hikes, and concern about a recession have weakened demand for discretionary purchases throughout the year. For instance, Peloton Interactive Inc. (PTON), a major partner of Affirm, has posted several consecutive quarters of losses as the surge in demand for its products during quarantine ebbed.

2. AppLovin Corp. (APP)

• Year-to-Date Return: -85.7%
• Sector: Technology
• Market Cap: $5.0B

Mobile technology company AppLovin offers software and platforms to assist app developers with marketing and monetizing their products. Its offerings include a machine-learning recommendation engine, cloud infrastructure, and data analytics services. AppLovin reported net income of $24 million for the most recent quarter, up from $100,000 a year earlier. Revenue fell 2% to $713 million.

Tech stocks slumped in 2022 as rising rates curbed the performance of growth stocks. For AppLovin, the broader tech trend was exacerbated by disappointing outlook and earnings results throughout the year.

3. Wayfair Inc. (W)

• Year-to-Date Return: -83.3%
• Sector: Consumer Cyclical
• Market Cap: $3.4B

Wayfair operates an ecommerce platform selling more than 33 million home products, including furniture, decor, housewares, and home improvement items. The company's net losses widened by $205 million to $283 million for the most recent quarter, while revenue fell by 9%.

As consumers stayed home and shopped online early in the pandemic, profit and share prices rose at ecommerce companies like Wayfairr. Now, many of their shares are falling thanks to easing lockdown restrictions, supply chain concerns, and rising prices. Wayfair's stock price plunged in August when it said it would cut hundreds of jobs to reduce costs.

4. Coinbase Global Inc. (COIN)

• Year-to-Date Return: -82.9%
• Sector: Technology
• Market Cap: $9.7B

Coinbase, one of the world's largest cryptocurrency exchanges, offers a platform to buy and sell cryptocurrencies and decentralized applications. It serves retail users, institutions, developers, merchants, and other participants in the crypto market. . The company posted three consecutive quarters of losses in 2022 as revenue fell 53% to $576 million in the third quarter.

Prices of cryptocurrencies and related assets such as non-fungible tokens (NFTs) plunged in 2022, eroding transaction revenues for exchanges such as Coinbase. Supply chain issues which have made crypto mining equipment expensive and difficult to come by, further depressing transactions. Most recently, the collapse of the exchange FTX has eroded trust in even the most established cryptocurrency exchanges.

5. Twilio Inc. (TWLO)

• Year-to-Date Return: -82.6%
• Sector: Communication Services
• Market Cap: $8.4B

Cloud communications company Twilio provides a platform allowing developers to build and manage applications. It gives infrastructure for developers to operate customer engagement and to embed voice, messaging, email, and video capabilities into apps. Twilio's losses widened by $225 million to $457 million in the third quarter while revenue climbed by 33% to $983 million.

Twilio's stock has fallen in 2022 while it has struggled to achieve profit. Although it has achieved 43% revenue growth in the past 12 months, Twilio's losses are significant and potentially outweigh its rapid sales gains.

The Bottom Line

High oil and gas prices caused by a confluence of geopolitical factors are why most of the top five were from the energy industry. While on the bottom five were more diverse, all were growth stocks susceptible to the economic slowdown and the accompanying flight to quality.