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Riding the Sector Wave to Big Stock Gains

I hope everyone had a chance yesterday to spend some quality time with family and friends for Memorial Day.

It’s always nice to take a break from the markets when holidays come along.

But it’s also hard waiting for the markets to reopen again when you know there is money to be made.

And for the most part, there is one main sector that continues to deliver gains… Energy.

Industry Impact

Stocks tend to move in groups. In fact, according to my research, about 30% of a stock’s movement is dependent on the movement of that stock’s industry group.

For example, Snap Inc. (SNAP) dropped over 40% on May 24 as it warned investors about slowing growth at the company.

Well, Meta Platforms, Inc. (FB) dropped nearly 8% that day, while Pinterest, Inc. (PINS) fell 23% and Twitter, Inc. (TWTR) dropped 6%.

Sure, they didn’t drop nearly as much. But the plunge in SNAP stock certainly reverberated throughout the sector that day.

This effect happens on the bullish side as well, and it’s one of the reasons we have seen so much success in one of our latest energy stocks…

Energy Earnings

Now, if stocks tend to move with their industry groups, industry groups certainly tend to move with earnings and revenue.

And the sector that’s really in the driver’s seat for earnings growth right now is the energy sector.

S&P 500 Earnings Growth by Sector Q1 2022 – Source: Factset

According to an April 29 report by Factset, the energy sector is leading all other sectors in terms of year-over-year earnings growth.

Energy comes in with growth of 257.8% year-over-year, followed by Materials at 38.7% and Industrials at 32.0%.

S&P 500 Revenue Growth by Sector Q1 2022 – Source: Factset

Energy also leads all sectors in revenue growth for the first quarter of 2022, as you can see in the chart above.

So, it should come as no surprise that we’ve seen some great results from our energy stock ideas.

Permian Play

Now, all of that brings us back to Permian Basin Royalty Trust (PBT), which I recently highlighted in my article, How We’re Picking Winners & Losers in This Market.

At that time, I told you that PBT had seen a clean breakout above resistance that took the stock 17% higher on May 20.

This was an official trade over in my premium Alpha Stocks trading service, and I recommended subscribers take a 10.43% gain on the first portion of the PBT position in just three days.

Daily Chart of Permian Basin Royalty Trust (PBT) – Source: TradingView

Here’s the current daily chart of PBT so you can see the breakout and the subsequent move.

I wanted to follow up on this idea today because last Wednesday, May 25, I recommended subscribers sell half of their remaining shares as the stock jumped further.

According to the Alpha Stocks Trade Tracker, we closed this portion of the trade at $17.20 for a gain of 22%.

We also raised our stop on the final piece of the trade to $15.60.

Industry Boost

Now, the stock was up even further this past Friday to a high of $17.63. PBT rallied 5% as the price of crude oil (CL) jumped just 1%.

But already this morning, crude is up another 3% and breaking above short-term resistance.

Daily Chart of Crude Oil Futures (CL) – Source: TradingView

This move should propel PBT to even further highs, so keep an eye on the stock. 

If oil gets back into the $120-$130 per barrel range again, things could get really interesting.

But even if it doesn’t and the energy sector just continues to hold its own, I still expect PBT to perform well.

Join Me at Alpha Stocks

If you want to receive an alert when it’s time to close the remaining portion of this trade, consider signing up for my Alpha Stocks research service.

As you can see, we have plenty of long ideas for the right stocks, but we’re also not afraid to go short. We short stocks and we also provide option alternatives if that’s more of your style.

And we get together every Monday for an hour-long live session so that subscribers can ask questions and get guidance about our trades.

If you’re ready to see what you could be missing out on, I’m holding a special session this afternoon…

Just click here to register and learn more about Alpha Stocks now!

Embrace the surge,

Ross Givens
Editor, Stock Surge Daily

Ross Givens
Ross Givens

I bought my first stock when I was 12 years old. It was Microsoft. I’ve been a registered financial advisor. I’ve worked as a stock broker. I ran a managed fund. I was a Vice President at JP Morgan with Series 7, Series 66 and Series 3 securities licenses. I’ve been featured on Fox Business, CNBC, Bloomberg, and a bunch of other networks. The only thing I enjoy more than making money, is helping YOU make money.

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