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It’s been a rough start for stocks in 2025, as major U.S. indices continue to trade in the red and underperform their international counterparts. Investors have had few places to hide outside of gold, but the energy sector has been one bright spot.
While still negative year-to-date, the SDPR Energy Select Sector ETF (NYSE: XLE) is down only 4.2% in 2025, compared to a 9.8% decline in the S&P 500.
Why have energy stocks outperformed in this uncertain environment? A few reasons could be:
Despite an elevated recession risk, as evidenced by oil briefly dropping below $60 per barrel, the energy sector has been buoyed by these tailwinds, along with the electric vehicle adoption growth and nuclear innovations like small modular reactors (SMRs).
Investing in energy isn’t often a path to outsized profits. Still, there are years where the energy sector outperforms more prominent industries like finance and tech, and 2025 could be next as energy materials appear to be getting hit with lighter tariffs. The sector is also broader than it has been in the past, with renewables and clean energy resources becoming a more focal point.
The best energy stocks balance strong financial performance with exposure to long-term growth trends such as clean energy innovation, global energy demand, and infrastructure resilience, making them well-positioned to outperform in both stable and uncertain market environments.
Nuclear energy stocks offer investors a compelling mix of stability and growth potential, especially as the global push for clean energy intensifies. These stocks represent companies engaged in uranium mining, nuclear power generation, and the production of related technology and equipment. While nuclear power is known for its high efficiency and low carbon emissions, the disposal of radioactive waste remains a critical challenge.
Here are two of the best nuclear energy stocks so far this year:
Vistra Corp. (NYSE: VST) is a diversified energy company that integrates nuclear and solar power within its energy portfolio.
[content-module:CompanyOverview|NYSE:VST]The company is also actively expanding its battery storage capacity to support grid resilience in high-demand markets.
Vistra has impressed analysts with its operational efficiency, with 10 out of 13 giving it a Buy rating.
Its stock currently trades at just 14x forward earnings, signaling possible undervaluation, especially given its recent performance.
Vistra reported a robust 32% operating margin last quarter, underscoring its strong cost management and revenue generation capabilities.
GE Vernova Inc. (NYSE: GEV), a spinoff from General Electric, delivers energy through nuclear, hydro, steam, and gas technologies.
[content-module:CompanyOverview|NYSE:GEV]It is also investing in next-gen nuclear technologies to support decarbonization goals globally.
In 2024, GE Vernova turned profitable and has maintained solid momentum into 2025.
Over the past year, it has brought in $35 billion in revenue and earned $1.55 billion in net income.
While the stock trades at a higher valuation, its sales growth and diverse energy offerings make it an intriguing option for long-term investors.
Oil and gas is actually three industries in one: upstream, midstream, and downstream. Upstream companies explore patches and install wells for extraction; midstream companies deal with the transportation and storage of raw crude oil; downstream companies refine the product into fuel and distribute it to gas stations, airlines, and other outlets.
Some large integrated companies, like ExxonMobil, do all three processes themselves, but most specialize in one area.
Here are two of the best oil and gas stocks so far this year:
Coterra Energy Inc. (NYSE: CTRA) focuses primarily on natural gas and operates within the upstream segment of the oil and gas industry.
[content-module:CompanyOverview|NYSE:CTRA]It’s been one of the top-performing energy stocks in 2025, standing out with a price-to-earnings ratio of just 7.7.
This attractive valuation and its sector-leading performance make it a compelling choice for value-focused investors.
Coterra’s balanced capital return strategy includes consistent dividend payouts and stock buybacks.
Western Midstream Partners LP (NYSE: WES) handles the transportation and processing of natural gas and other energy products.
[content-module:CompanyOverview|NYSE:WES]As a midstream company, it plays a critical infrastructure role in the energy supply chain.
Western Midstream has delivered strong financials recently, with a profit margin of 43% in the latest quarter and a P/E ratio of 9.43, reflecting healthy investor confidence and profitability.
Its stable cash flows support a generous dividend yield that appeals to income-focused investors.
The renewable energy industry includes companies focusing on sustainable sources like wind, solar, hydropower, geothermal, and biomass. These companies often have higher valuations than their peers, as sales figures are lower, and stocks are traded based on innovation and potential.
Here are two of the best renewable energy stocks so far this year:
Brookfield Renewable Partners LP (NYSE: BEP) operates across several renewable segments, including wind, solar, hydroelectric, renewable natural gas, and even nuclear services.
[content-module:CompanyOverview|NYSE:BEP]The company has also committed to achieving net-zero emissions across its operations by 2050.
Brookfield reported more than $5.7 billion in revenue over the past year.
Despite a $255 million net loss, analysts maintain a consensus Buy rating, citing potential upside of over 30% thanks to its strong asset base and growth opportunities.
Ormat Technologies Inc. (NYSE: ORA) is a mid-cap renewable energy company specializing in geothermal and solar power.
[content-module:CompanyOverview|NYSE:ORA]Ormat recently expanded its geothermal footprint with new projects in Southeast Asia and Latin America.
It achieved $124 million in net profit over the last year and maintains high profit margins.
Though its stock trades at a relatively steep 36x forward earnings, Ormat is financially healthy with minimal debt and even offers a dividend, making it attractive to growth and income investors alike.
The 2025 energy investment landscape offers opportunities in both traditional and renewable energy. Conventional sources like oil and gas remain crucial, offering stable returns but slow growth and environmental concerns. Renewable sources are gaining traction due to declining costs and government incentives, offering opportunities for long-term returns and sustainability benefits. You can align your strategies with your goals, but it's always a good idea to consult with an advisor before making significant adjustments to your portfolio.
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The article "The 6 Best Energy Stocks to Buy Now" first appeared on MarketBeat.
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