Energy businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. But their prominence also brings high exposure to the ups and downs of economic and energy cycles. Luckily, their overall demand was steady over the past six months as the industry’s 11.9% return has closely followed the S&P 500.
Regardless of these results, investors should tread carefully. The diversity of companies in this space means that not all are created equal or well-positioned for the inescapable downturn. With that said, here is one energy stock poised to generate sustainable market-beating returns and two we’re passing on.
Two Energy Stocks to Sell:
TechnipFMC (FTI)
Market Cap: $30.07 billion
Operating a fleet of 16 specialized vessels that install equipment on the seafloor, TechnipFMC (NYSE: FTI) designs and manufactures subsea systems that control the flow of oil and natural gas from the ocean floor to processing facilities.
Why Are We Cautious About FTI?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Gross margin of 18.7% reflects its high production costs and unfavorable asset base
TechnipFMC is trading at $75.35 per share, or 22.1x forward P/E. Read our free research report to see why you should think twice about including FTI in your portfolio.
Solaris Energy Infrastructure (SEI)
Market Cap: $3.94 billion
After acquiring Mobile Energy Rentals in 2024 to enter the distributed power market, Solaris Energy Infrastructure (NYSE: SEI) leases mobile power equipment and provides logistics services for oil and gas well completion.
Why Does SEI Fall Short?
- Modest revenue base of $762.2 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Gross margin of 42.6% is below its competitors, leaving less money to invest in exploration and production
- Negative free cash flow raises questions about the return timeline for its investments
Solaris Energy Infrastructure’s stock price of $60.29 implies a valuation ratio of 77.1x forward P/E. Dive into our free research report to see why there are better opportunities than SEI.
One Energy Stock to Watch:
Magnolia Oil & Gas (MGY)
Market Cap: $6.13 billion
Operating over 600,000 net acres primarily in two distinct South Texas regions, Magnolia Oil & Gas (NYSE: MGY) drills and produces oil, natural gas, and natural gas liquids from South Texas formations.
Why Are We Positive on MGY?
- Annual revenue growth of 15.2% over the last five years beat the sector average and underscores the unique value of its offerings
- Highly-profitable operating model results in strong unit economics and a best-in-class gross margin of 84.6%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $25.50 per share, Magnolia Oil & Gas trades at 8.8x forward P/E. Is now the time to initiate a position? Find out in our full 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.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
