Energy businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Their momentum is also rising as lower interest rates, as well as AI energy needs, have incentivized higher capital spending. As a result, the industry has posted a 22% gain over the past six months, beating the S&P 500 by 13.5 percentage points.
Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. With that said, here are two energy stocks we think can generate sustainable market-beating returns and one best left ignored.
One Energy Stock to Sell:
ExxonMobil (XOM)
Market Cap: $607.6 billion
One of the successor companies to John D. Rockefeller's Standard Oil monopoly that was broken up in 1911, ExxonMobil (NYSE: XOM) explores for and produces crude oil and natural gas, refines and sells petroleum products, and manufactures petrochemicals.
Why Are We Cautious About XOM?
- Gross margin of 44.1% is below its competitors, leaving less money to invest in exploration and production
- EBITDA margin didn’t move over the last five years, showing it couldn’t increase its efficiency
ExxonMobil is trading at $136.51 per share, or 10.6x forward P/E. Dive into our free research report to see why there are better opportunities than XOM.
Two Energy Stocks to Watch:
EQT (EQT)
Market Cap: $32.02 billion
The largest natural gas producer in the United States by daily volume, EQT (NYSE: EQT) produces natural gas and natural gas liquids from wells drilled in the Appalachian Basin.
What Makes EQT Stand Out?
- Annual revenue growth of 15.4% over the last ten years was superb and indicates its market share increased during this cycle
- EBITDA margin improvement of 27 percentage points over the last five years demonstrates its ability to scale efficiently
- EQT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
EQT’s stock price of $53.26 implies a valuation ratio of 12.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
HighPeak Energy (HPK)
Market Cap: $1.01 billion
Operating in the oil-rich northeastern corner of the Midland Basin where Howard and Borden counties meet, HighPeak Energy (NASDAQ: HPK) explores for, develops, and produces crude oil, natural gas liquids, and natural gas.
Why Does HPK Stand Out?
- Annual revenue growth of 78.2% over the past five years was outstanding, reflecting market share gains this cycle
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 78.8%
- EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
At $7.00 per share, HighPeak Energy trades at 3.5x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
