We just published a list of the 10 Toxic Energy Stocks to Sell Now That the Blue Wave is Here, and APA Corporation (NASDAQ:APA) ranked 9th on this list. Energy stocks have enjoyed a strong rally this year, driven primarily by supply disruptions in the Middle East and the Russia-Ukraine war. The blockage on the
Energy stocks have enjoyed a strong rally this year, driven primarily by supply disruptions in the Middle East and the Russia-Ukraine war. The blockage on the Strait of Hormuz has choked around a third of the global crude oil and LNG supplies, pushing prices and margins to multi-year highs.
As a result, the overall energy sector has surged by 40.68% since the beginning of 2026, significantly outperforming the 10.70% gains delivered by the wider market.
APA Has Rallied by 91% This Year. Has the Stock Hit its Peak?
According to an estimate by The New York Times, the 51 large US oil and gas companies have earned more than $130 billion in profits during the six months from April through September this year, compared to less than $47 billion in the same period last year. Refiners also reaped exceptional profits after the 3-2-1 crack spread, which measures US refinery margins, gained more than 150% during the July-September period, from a year earlier.
That said, while the high prices are a major tailwind for oil and gas companies, they have been a headache for American households, prompting them to vote against President Trump’s Republican Party in the recent midterm elections. Democrats campaigned hard on lowering prices, especially at the gas pump, and voters listened. As a result, Brent crude prices have fallen by almost 17% since the end of October, as investors bet that the power shift could hasten the end of the US-Israeli war with Iran.
The President himself also acknowledged that the war had played a role in his party’s sweeping defeat, while also stating that he had no immediate plans to strike Iran. Experts now believe that after losing Congress to Democrats, a weakened Trump has greater incentive to seek a deal, and a full-scale assault on Iran now looks less likely.
This could spell bad news for American energy stocks, many of which have soared to record highs this year. At the end of the day, the oil business is cyclical in nature, and the latest political developments are a sign that the ongoing cycle may have seen its peak. While it could still take a while for the Iran war to reach a conclusion, investors need to be mindful that even a modest decline in profits could trigger a significant valuation correction for several major energy operators.
APA Corporation (NASDAQ:APA) had a short % of float of 6.95% as of October 30, and decades of academic and quantitative market research show that stocks with high short interest are statistically more likely to underperform the broader market over time. In major empirical studies, portfolios of heavily shorted stocks have historically lagged low-short-interest stocks by roughly 1% to 2% per month on a risk-adjusted basis.
APA Corporation (NASDAQ:APA) is an independent exploration and production company that develops and produces crude oil, natural gas, and natural gas liquids.
APA beat top- and bottom-line estimates in its Q3 2026 results on November 4. Revenue surged by 39.35% YoY, while net income attributable to shareholders jumped by over 240. However, much of this improvement came from higher prices rather than increased production.
APA generated $699 million of free cash flow during the third quarter and returned $537 million to shareholders. Notably, the company capitalized on the higher prices to bolster its balance sheet and retired approximately $450 million of debt, ending the quarter with a total debt of $3.3 billion. The energy firm has reduced total debt by $2.8 billion since year-end 2024, lowering annualized interest expense by more than $180 million.
APA also remains focused on operational efficiency and reiterated its target of achieving $500 million in annualized savings by the end of this year.
That said, the company’s production trends deserve attention. APA’s worldwide oil production decreased 13,400 barrels per day (bpd) to 220,900 bpd during the third quarter from the year-ago period, primarily due to the natural production decline in the North Sea and lower production-sharing contract volumes in Egypt. If oil prices normalize, the company could face pressure from both lower realized prices and declining production volumes.
“Energy holdings produced mixed results, with APA Corporation among the detractors. This variation reinforces our preference for evaluating individual business models rather than relying exclusively on a sector outlook. Commodity exposure, contractual revenue, investment requirements, and competitive positioning can produce markedly different outcomes within the same industry. Those differences offer room for active selection even when the broader direction of a market remains uncertain.”
APA Corporation (NASDAQ:APA) ranked 6th on our list of the 12 NASDAQ Stocks to Buy for Dividends. To see which stocks outranked it, click HERE.
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