The volatility of crude oil prices in the past 30 days has been extreme. The expectation that we would see low crude prices like the prices we saw last year are not expected in 2026.

The sector with the most negative impact from this is consumer discretionary. Stocks like LULU, NKE, ABNB and AAPL will see a slow down in sales as the consumer’s wallet gets smaller due to increase gasoline prices. These same companies will also deal with increase input cost since shipping and transportation will increase. This will shrink profit margins and free cash flows. The valuations of consumer discretionary stocks have gone down and there will be more sellers than buyers of these stocks.

Sectors that will also see some negative impact from high oil prices are financials and industrials. Companies in these sectors will experience a slower revenue growth. Stocks like CAT, UAL and JPM will see profits go down or remain stagnate. Travel, infrastructure projects and financing should experience a slower economic activity.

The sectors that stand to benefit most is energy and consumer staples. Energy companies will see an immediate increase in revenue, profits and free cash flow. Stocks like XOM, ENB and OKE will pay healthy dividends and will be a place for investors that seek outperforming stock this year. The high volatility and increased geopolitical risk has driven investors into safe consumer staple stocks. Safe stocks like KR, PG and PM will pay dividends and protect capital during this higher risk period.

Are higher oil prices here to stay? That is hard to predict the exact timing. We can make one conclusion which is that oil prices will be generally be higher in the next 2 years, then they have been for the past 2 years.

It is great that United Therapeutics is providing treatments for life threatening diseases, growing revenue and making a lot of money. This stock can continue to outperform long term if they launch their new drugs successfully and they are able to launch the organ transplant business as well.

The best performing super investors are invested in materials and energy stocks. In stark contrast with the stocks that lead the market in 2023, 2024 & 2025 which were mostly in technology. It is impossible to determine how long the new trade will last. But studying the most respected investor portfolios opens up ideas on what stocks may outperform over the next 12 months.

Costco attracts investors that want to own a well run company that is a very popular place to shop. The investing thesis is simple, but the intrinsic value of $COST is much lower than the stock price. This stock is too expensive and there are stocks in other sectors that provide a better opportunity for long term investors.

The war extends in Iran is disrupting to global oil supply and this result is oil prices that are over 30% higher in 2026. If oil prices continue to increase, stocks in oil stocks will continue to rise quickly. This is one of the simplest investing themes that may be just beginning.