Energy stocks are outperforming every other group in the S&P 500 Index this year to such an extent that some of their peers are even considering testing the all-but-dead market for initial public offerings.
Four companies from the sector have filed for US IPOs this month, tying with July of 2019 for the most in more than five years. That contrasts with the rest of the IPO market, where the number of new filings has been trending down for most of 2022.
This month’s new filings from the energy space include solar firms MN8 Energy Inc. and Solarjuice Co Ltd, nuclear power materials maker ASP Isotopes Inc. and oil and gas producer Trio Petroleum Corp.
Energy is the long bright stop in a struggling market this year. Despite a June swoon, investors have enthusiastically bought up oil and gas stocks, with the S&P 500 Energy Index up 39% year to date while the S&P 500 has lost 21%.
Still, the oil and gas sector has seen relatively few IPOs so far because private companies have chosen to sell to larger competitors, instead of going public themselves, said MKM Holdings LLC analyst Leo Mariani. Oil and gas producers are still deeply discounted, making new IPOs less attractive than takeovers, he added.
The few energy IPOs that already priced this year have seen mixed results. Excelerate Energy Inc. is trading narrowly above its April 12 IPO price, while ProFrac Holding Corp. has fallen below its May 12 offering.
|Pricing date||First-day performance||Offering price to date|
|Excelerate Energy||April 12||+12%||+1.9%|
In sharp contrast to the performance of oil and gas companies, solar stocks have languished for much of the year as a result of a Department of Justice investigation into dumping and tariff evasion in the sector. The sector’s fortunes changed in August when US lawmakers agreed to the Inflation Reduction Act, which specifically rewards solar companies with supply chains in the US. The Invesco Solar ETF has risen 11% in the third quarter to erase year-to-date losses.