Energy prices soared last year, and there has been a lot of focus on the different options for powering homes, offices and cars. Energy stocks in general performed much better than the rest of the market last year but have lost considerable ground so far in 2023. The S&P 500 Energy Sector Index, for example, is down 10%.
But that doesn’t mean you’ve missed the boat — energy will always be needed, so this could be an opportunity to buy the dip.
What Are the Best Energy Stocks To Invest In?
Here are some of the best energy stocks for 2023.
- Occidental Petroleum
- Brookfield Renewable Partners
- First Solar
- Southern Company
Oil and Gas Stocks
Gas prices are down from 2022, but despite volatility over the past year, the energy sector’s overall trend has been upward since November 2020. Here are some oil and gas stocks to consider this year.
- Price: $101.94
- Market cap: $123.354 billion
ConocoPhillips (COP) is an oil and gas exploration, production and transportation company headquartered in Texas, with operations in 13 countries worldwide.
ConocoPhillips stock has fallen nearly 13% so far this year, closing at $101.94 on June 6. However, analysts are undeterred. Of the 21 who follow COP, six rated it a strong buy, nine rated it a buy and six recommend holding it, according to Yahoo Finance. The average 12-month price target is $130.83.
The company recently announced it will acquire the remaining interest in the Surmont oil facility this year in a deal that will add about $600 million per year in free cash flow to Conoco’s balance sheet, according to Zacks Investment Research. ConocoPhillips expects to return $11 billion to investors this year.
- Price: $155.79
- Market cap: $295.166 billion
Chevron (CVX) is an upstream, midstream and downstream oil company — meaning it handles exploration and production, transportation, and refining and retail. It drills in the U.S. Gulf of Mexico and offshore Western Australia and West Africa. After transporting and refining crude oil, it sells gasoline to consumers at Chevron, Texaco and Caltex gas stations. The company produces other products and services for industrial, commercial and consumer applications.
Chevron’s stock closed at $155.79 on June 6, down from $173.99 in January, for a 10.46% year-to-date decline. Sixteen of 24 analysts rate it a buy or a strong buy, seven recommend holding it and one rates it an underperformer. The average 12-month price target is $189.79.
Chevron has a robust stock repurchase program and expects 2023 to be its 36th consecutive year of increasing its annual dividend per share, according to a press release. The forward dividend yield is 3.88%.
3. Occidental Petroleum
- Price: $59.44
- Market cap: $53.005 billion
Occidental Petroleum Corp. (OXY) has oil and gas assets in the U.S., Africa, the Middle East and Latin America. The company is focused on providing traditional energy sources in a low-carbon environment. Warren Buffett has been buying up shares of OXY for Berkshire Hathaway, its largest holder, with a stake of 23.74% as of June 5, according to Yahoo Finance.
As of June 6, OXY was trading at $59.44, up about 10% from its 52-week low of $54.30. Most analysts — 15 out of 24 — recommend holding it, one says it’s underperforming and one advises selling. But three analysts call it a buy, and four say it’s a strong buy. The average 12-month price target is $70.88.
Renewable Energy Stocks
Last year’s increase in gas prices and the impact of climate change have combined to make renewable energy a top priority for many governments — and for investors. Here are some of the top renewable energy stocks this year.
4. Brookfield Renewable Partners
- Price: $31.81
- Market cap: $14.215 billion
Brookfield Renewable (BEP) has hydroelectric, wind and solar power, as well as storage facilities, in North America, South America, Asia and Europe. With renewable energy top of mind for many, the company has good prospects.
As of June 6, Brookfield Renewable stock was up 22.68% year to date, starting the year at $25.93 and growing to $31.81. Of the 13 analysts who followed the stock in May, two called it a strong buy, nine rated it a buy and two recommended holding the stock. The average of the analysts’ estimates of its price a year from now is $37.81.
5. First Solar
- Price: $196.82
- Market cap: $21.025 billion
First Solar (FSLR) manufactures photovoltaic modules for solar panels. The company claims to have the best environmental profile in the industry, using less energy, water and semiconductor material than its competitors.
First Solar stock is up nearly 40% since the beginning of the year and is currently trading around 15% off its 52-week high of $232. Analysts are a little lukewarm on this stock, however, with eight recommending investors hold the stock, while six call it a buy and three call it a strong buy. The average 12-month price target is $220.58.
Producers of electricity and gas utilities will always be in demand as the population grows and more and more energy is required. Utility stocks are often considered defensive; that is, they historically outperform many other sectors in a down market. Here is one of the best utility stocks this year.
6. Southern Company
- Price: $69.37
- Market cap: $75.641 billion
Southern Company (SO) provides electricity to customers in three states and natural gas to customers in four, totaling 9 million homes and businesses.
It is the parent company of electric companies Alabama Power, Georgia Power and Mississippi Power, and of natural gas companies Southern Company Gas, Atlanta Gas Light, Chattanooga Gas, Nicor Gas and Virginia Natural Gas. It is also the parent company of Southern Nuclear, Southern Power, PowerSecure, Southern Telecom and Southern Linc.
Southern Company closed at $69.37 on June 6, well above its 52-week low of $60.71 but slightly below its $71.90 price the first trading day of 2023.
Analysts aren’t fully behind the company. Although Zacks Investment Research rates it a 2 for buy, among analysts polled by Yahoo Finance, one calls it a strong buy, four recommend it as a buy, eight advise investors to hold the stock, two call it an underperformer and two recommend selling. Those analysts’ average price target is $73.15 in a range of $61 to $82.
Whether you want to invest in the best energy stocks, the best power stocks or the best clean energy stocks, these are good places to start. The demand for energy, especially clean energy, will only increase, and these stocks tend to do well even when the rest of the market does not, making them a good buy in a bear market.
FAQHere's what people are asking about energy stocks. The answers could help you make a decision about which might be a good fit for your portfolio.
- What is a good cheap energy stock?
- Occidental Petroleum is a good stock and comparatively inexpensive at $59.44 on June 6. Warren Buffett, arguably the world's most successful value trader, is its biggest shareholder through his company, Berkshire Hathaway.
- What stocks will boom in 2023?
- While there are no guaranteed booms in trading, Brookfield Renewable Partners and First Solar both have solid momentum and could continue to rise.
- What energy companies is Bill Gates investing in?
- Bill Gates' own energy company is Breakthrough Energy Ventures. Through Breakthrough, Gates is investing in dozens of other energy companies, including ClearFlame, Electric Hydrogen, Form Energy Inc., Natel Energy, One and Sierra Energy.
- What clean energy stocks should I buy now?
- The two renewable stocks in this roundup – Brookfield Renewable Partners and First Solar – are good choices.
- Will energy fuels stock go up?
- It's impossible to say with certainty whether the entire category of energy fuels stocks will go up or down during any given period. However, many individual energy fuel stocks are likely to increase over time. It's important to research companies, and not just industries and sectors, before you invest.
Top Stocks To Invest In
Best Energy Stocks
- Gold Stocks
- Lithium Stocks
- Mining Stocks
- Oil Stocks
- Natural Gas Stocks
- Renewable Energy Stocks
- EV Stocks
- ESG Stocks
Best Tech Stocks
Daria Uhlig contributed to the reporting for this article.
Data was compiled on June 6, 2023, and is subject to change. Unless otherwise noted, information on analyst ratings was sourced from Yahoo Finance.
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