Now that the world is reopening after lockdowns, traders are looking for the top energy stocks to trade.
Supply and demand rule the energy sector. We saw that last year when energy stocks tumbled … along with the rest of the market.
During the pandemic, oil prices crashed below $0 per barrel because of supply and demand.
Yep, that means suppliers were paying people to take their oil…
But the return to normal is helping energy stocks recover … They’re having a great 2021. The XLE fund that tracks energy stocks is up 44% so far this year! Let’s dig into this sector.
Table of Contents
- 1 What Are Energy Stocks?
- 2 Hot Energy Stocks for 2021
- 2.1 Energy Stocks to Watch #1: Valvoline Inc. (NYSE: VVV)
- 2.2 Energy Stocks to Watch #2: Cheniere Energy, Inc. (NYSEAMERICAN: LNG)
- 2.3 Energy Stocks to Watch #3: Cimarex Energy Co. (NYSE: XEC)
- 2.4 Energy Stocks to Watch #4: ConocoPhillips (NYSE: COP)
- 2.5 Energy Stocks to Watch #5: Targa Resources Corp. (NYSE: TRGP)
- 2.6 Energy Stocks to Watch #6: Occidental Petroleum Corporation (NYSE: OXY)
- 2.7 Energy Stocks to Watch #7: Diamondback Energy Inc. (NASDAQ: FANG)
- 2.8 Energy Stocks to Watch #8: Murphy Oil Corporation (NYSE: MUR)
- 2.9 Energy Stocks to Watch #9: Pioneer Natural Resources Co (NYSE: PXD)
- 2.10 Energy Stocks to Watch #10: PDC Energy Inc. (NASDAQ: PDCE)
- 3 Top 3 Renewable Energy Stocks
- 4 3 Best Value Energy Stocks
- 5 How to Find Good Energy Stocks
- 6 Which Energy Stocks Have the Highest Dividend?
- 7 Frequently Asked Questions About Energy Stocks
- 8 Energy Stocks: The Bottom Line
- 9 One Platform. One System. Every Tool
What Are Energy Stocks?
Energy stocks are stocks of companies that produce or distribute renewable energy, oil, natural gas, and electricity.
But energy stocks fluctuate a lot, so do your homework. Know what to buy … and when to buy it.
In general, when the economy’s good, energy stocks are a good bet. But do your homework!
Read up on what’s going on. Or stay up to date with the sector AND the trading world — join me LIVE each morning at 8:30 Eastern for my Pre-Market Prep sessions. I’ll dig through the top news and stocks of the day to help you start your trading day.
How Fast Is Green Energy Growing?
Green or renewable energy is a segment of the energy sector…
It’s been breaking out lately because of growing pressure on companies to cut their carbon footprint. And energy created through solar, wind, hydroelectric, and geothermal is considered the cleanest.
Even long-time oil producers are starting to diversify their portfolios with green energy to avoid being phased out of the market.
The International Energy Agency (IEA) projects that renewable energy will become the largest source of electricity by 2025. So it’s important to keep tabs on renewable energy stocks.
Renewable energy gains about 1% market share each year based on recent estimates and future projections.
Some of the largest energy stocks today still focus on fossil fuel production, but I don’t think that will be the story of the energy sector for much longer. Green energy stocks have a bright future.
Ready to spot the best stocks in any sector or any kind of market for your strategy? Join our SteadyTrade Team for pro-level guidance!
Hot Energy Stocks for 2021
Now, let’s get to some of the top stocks in the energy sector. Keep in mind that this list is just for watchlist purposes. Always do your research before every trade.
Energy Stocks to Watch #1: Valvoline Inc. (NYSE: VVV)
Motor oil producer Valvoline says it’s repurchasing $300 million worth of shares through 2024, slowly adding value to its outstanding shares…
Cars are complex these days. That means more and more people take their cars for professional service instead of doing it themselves. Companies like VVV see opportunity…
Valvoline focuses on quick service, more face-to-face time with customers, and more opportunities to upsell.
VVV has quietly ticked up 20% since mid-April. It’s hovering around $30–$32 as of this writing with some strong support. The right catalyst could spark a nice move.
Energy Stocks to Watch #2: Cheniere Energy, Inc. (NYSEAMERICAN: LNG)
Who’s up for some increased guidance? Sounds great if it translates, but that could also prove tough to do.
For the time being, though, there’s nothing to be disappointed about with Cheniere Energy … The company operates liquefied natural gas pipelines in Texas and Louisiana, and it’s been having a strong year.
LNG stock is up 46% year to date. Like VVV, it’s settled on strong support and could snap upward with any positive oil news.
Energy Stocks to Watch #3: Cimarex Energy Co. (NYSE: XEC)
There have been a lot of mergers in the energy sector in the past year, and Cimarex joined in on the fun with Cabot Oil & Gas.
This merger was different from the others in the sector, though, because it wasn’t about absorbing a rival…
Cimarex drills in Oklahoma, Texas, and New Mexico, while Cabot produces gas in Pennsylvania. This combination represents diverse energy exploration.
XEC is pushing a hard ceiling of $75 that it tested twice in the past two months. If it finally breaks through, it’s headed for yearly highs…
Energy Stocks to Watch #4: ConocoPhillips (NYSE: COP)
ConocoPhillips does it all when it comes to oil and natural gas.
COP enjoys an average cost of supply of less than $30 a barrel … And oil’s ascending prices mean more profits for Conoco.
Conoco is also in great shape financially, which helps when times get tough…
Times are pretty good right now, meaning COP is in for a great 2021.
Its stock keeps ticking higher…
Energy Stocks to Watch #5: Targa Resources Corp. (NYSE: TRGP)
Another guidance riser? Sounds good to me!
Targa is a huge infrastructure company in North America.
There’s not a ton to be said here that hasn’t already been said: it’s good to be in the oil and natural gas business right now.
TRGP stock has had a similar upwards trajectory this year that we’ve seen from the industry as a whole. The volume train has helped bring it up and down since the beginning of June.
Maybe it’ll help bring TRGP back up again soon…
Energy Stocks to Watch #6: Occidental Petroleum Corporation (NYSE: OXY)
This one is a little bit riskier than the others, but its success so far this year makes it hard to leave it off the list…
Occidental won a bidding war against Chevron last year to take over Anadarko Petroleum … using debt. As soon as lockdowns hit, OXY went from ‘growth’ to ‘survival.’
The stock dipped below $9 last fall, and it’s back up over $30 right now…
The current rise in oil prices is helping OXY — it just broke through some resistance. This might be a nice stock to ride while the oil market is hot…
Energy Stocks to Watch #7: Diamondback Energy Inc. (NASDAQ: FANG)
Diamondback has made some big deals already in 2021, purchasing QEP Resources for $2.2 billion and Guidon Energy for nearly $1 billion.
Acquisitions can mean a few different things … But in the end, it usually means more assets and less competition.
FANG has been a beast this year, jumping 106% since January. Better yet, it shows no signs of slowing down anytime soon…
Energy Stocks to Watch #8: Murphy Oil Corporation (NYSE: MUR)
Murphy Oil has been producing oil and natural gas since 1950. Companies don’t last that long unless they’re doing something right.
But energy companies that want to last are starting to go green … or greener.
Murphy cut its emissions intensity by 20% in the past two years, and the stock is doing great.
MUR doubled this year and might be gearing up for another run if it drops down to support just below $23…
Energy Stocks to Watch #9: Pioneer Natural Resources Co (NYSE: PXD)
What better to get a stock rolling than a good ol’ acquisition?
In April, Pioneer purchased privately held DoublePoint Energy for $6.4 billion, enhancing its position in the Midland Basin. This is in the southwestern part of the U.S. and a strong area economically.
Pioneer also bought rival Parsley Energy in January for $4.5 billion, giving the company even more access to the greater Permian Basin, one of the world’s richest oil fields.
PXD has been consolidating for a few months and could break yearly highs of $175 if it continues to push higher…
Energy Stocks to Watch #10: PDC Energy Inc. (NASDAQ: PDCE)
PDC Energy is a smaller company than most on this list. Its market cap is $3.5 billion. But it’s on here for good reasons.
PDCE operates in the DJ Basin in Colorado and Wyoming, an area with a slower recovery coming out of lockdowns.
But PDCE is resilient…
The stock has more than doubled since the beginning of the year and continues to climb. Some might call it the little oil producer that could…
Top 3 Renewable Energy Stocks
Want greener options? Let’s take a look…
Renewable Stock #1: Brookfield Renewable Partners LP (NYSE: BEP)
Brookfield’s focus on hydroelectric, wind, and solar makes it one of the largest renewable energy companies in the world.
The company gets a steady flow of cash through fixed purchase agreements, and its strong financial standing means it can invest up to $1 billion per year through 2025 to expand its renewable portfolio.
The investments will focus on solar energy and help Brookfield’s annual cash flow grow.
The renewable part of the energy sector lagged a bit in 2021, but it could be on an upswing now…
Renewable Stock #2: NextEra Energy Inc. (NYSE: NEE)
“Global leader in producing wind and solar power” has a nice ring to it, doesn’t it?
NextEra Energy brings a lot to the table when it comes to being a strong renewable energy stock from its business model to its financials.
I wouldn’t normally be this excited about a stock that’s down on the year, but it’s shown us already that it has some juice in it. NEE has been resting on its support since the middle of May, filling its tank with as much solar power as possible to shoot higher.
I don’t think it will take much to send this one higher.
Renewable Stock #3: First Solar Inc. (NASDAQ: FSLR)
First Solar’s thin-film solar panels have become popular because they produce lower cost-per-watt electricity than traditional silicon panels.
Solar panel producers tend to carry debt, but First Solar maintains a large cash position and a strong balance sheet. So the company has more money for development. In theory anyway.
FSLR is no different than its renewable competitors … It’s lagged this year, but it’s up 23% since the middle of May.
3 Best Value Energy Stocks
Let’s look at some value stocks…
Value Stock #1: Enterprise Products Partners L.P. (NYSE: EPD)
Currently valued at nearly $54 billion, Enterprise Products Partners is one of the better companies in the energy sector.
The do-it-all oil and natural gas producer and processor trades with a PE ratio of less than 15. EPD is up over 25% year to date.
Value Stock #2: Antero Midstream Corp. (NYSE: AM)
The midstream infrastructure operator is up over 35% in 2021 and trades at a PE of less than 15.
AM has ticked up all year and may be gearing up for another small jump…
Value Stock #3: Energy Transfer LP Unit (NYSE: ET)
Energy Transfer owns and operates roughly 12,340 miles of interstate natural gas pipelines and another 9,400 miles in Texas alone.
It has pipelines, processing plants, storage facilities, and oil pipelines throughout all the major American energy markets. And it’s up over 73% so far in 2021 and trades at a PE of less than 9.
ET has lost some steam lately, but support at $10 could help shoot it higher if it falls to that point…
How to Find Good Energy Stocks
My recipe for finding good trades works in every sector … Look for good setups and find high-volume plays.
Keeping an eye on the news is also key…
With StocksToTrade’s Breaking News Chat, you’ll get the hottest market news that can supercharge stock moves. Grab your 14-day trial of STT + BNC today for just $17!
When you use the right tools for the job, you can focus more on nailing your best setups. That’s what we’re all about at StocksToTrade.
Which Energy Stocks Have the Highest Dividend?
Dividends aren’t all that exciting to me, but I get the appeal. Let’s look at a few high-dividend energy stocks…
Dividend Stock #1: MPLX LP (NYSE: MPLX)
As of this writing, the subsidiary of Marathon Petroleum has a dividend yield of 9.22% and is up 36% year to date.
Dividend Stock #2: Rattler Midstream LP (NASDAQ: RTLR)
Rattler Midstream provides water-related services to Diamondback Energy, currently has a dividend yield of 7.23%, and is up over 18% on the year.
Dividend Stock #3: Magellan Midstream Partners, L.P. (NYSE: MMP)
The petroleum distributor offers an 8.37% dividend and is up nearly 19% year to date.
Frequently Asked Questions About Energy Stocks
What Is the Best Energy Stock to Buy?
You should know by now that there’s no ‘one size fits all’ trading strategy. My job is to guide you, not tell you what trades to make.
Any stock with a strong catalyst, high volume, and solid technical setup can make for a good trade. (See my full trading checklist here.) The best energy stock to buy depends on your criteria.
So, use this list as a guide to build your energy stocks watchlist. Figure out what matters for your strategy.
Are Energy Stocks Good for Trading?
It depends. Sectors fluctuate. Energy stocks rely on a lot of different factors around the globe.
So stay on top of the news … Things can change quickly.
That’s why platforms like StocksToTrade are so useful. We aim to make it easy for you to find the latest news, Twitter buzz, and more.
Are Energy Stocks Risky?
There’s risk in any trade. Nothing’s a sure thing. Be leery of anyone trying to tell you otherwise.
Supply and demand or any interference can throw the energy sector into a whirlwind. Opportunities could be great today and gone tomorrow…
Know what you’re getting into. Always back up your trades with plenty of research.
Is Now a Good Time to Buy Energy Stocks?
The energy sector had a tough 2020, but it’s rebounding nicely in 2021. Demand is rising, which means more potential profits for these companies.
Oil prices could continue to rise, and that means the sector could rise with them.
Some energy stocks have chugged along for moderate gains or even slight losses. That could make this a great time to scope out energy stocks for your strategy. Streamline your trading process — start your 14-day StocksToTrade trial NOW for just $7.
Energy Stocks: The Bottom Line
Energy stocks typically perform well when oil prices are on the rise.
Renewable energy is also on the rise. The companies thriving in solar, wind, and other forms of green energy could be powering the planet sooner than we may think.
Energy companies literally keep the world running, so I think they’re always worth keeping an eye on. Stay up to date on news and trends, though. Every hot sector runs out of fuel at some point, even if it’s only temporarily.
What’s on your energy stocks watchlist? Do you think the sector can stay hot? Let me know with a comment below!