The Best Energy Stocks to Buy Now

Energy stocks appeal to investors for a few different reasons:

• Energy stocks tend to perform independently of other types of stocks, so investors buy them to diversify their portfolios.
• Many energy stocks offer attractive yields and therefore appeal to investors who like high-dividend stocks.
• They provide investors with a way to play rising oil prices.
• Energy stocks can help hedge against inflation, as oil and gas prices typically rise during inflationary periods.

In 2025 through Aug. 26, the Morningstar US Energy Index rose 4.36%, while the Morningstar US Market Index gained 10.72%. The energy stocks that Morningstar covers look 6.9% undervalued on average.

The 9 Best Energy Stocks to Buy Now

These were the most undervalued energy stocks that Morningstar’s analysts cover as of Aug. 26.

1. SLB SLB
2. Halliburton HAL
3. Oneok OKE
4. Occidental Petroleum OXY
5. NOV NOV
6. ExxonMobil XOM
7. Energy Transfer ET
8. Devon Energy DVN
9. Baker Hughes BKR

To come up with our list of the best energy stocks to buy now, we screened for:

• Energy stocks that are undervalued, as measured by our price/fair value metric.
• Stocks that earn narrow or wide Morningstar Economic Moat Ratings, as well as companies that do not have a moat. We think companies with narrow economic moat ratings can fight off competitors for at least 10 years; wide-moat companies should remain competitive for 20 years or more.
• Stocks that earn a Low, Medium, High, or Very High Morningstar Uncertainty Rating, which captures the range of potential outcomes for a company’s fair value.

Here’s a little more about each of the best energy stocks to buy, including commentary from the Morningstar analysts who cover each company. All data is as of Aug. 26.

SLB

• Morningstar Price/Fair Value: 0.71
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.23%
• Industry: Oil and Gas Equipment and Services

Oil and gas equipment and services company SLB is the cheapest stock on our list of the best energy stocks to buy. SLB is the world’s premier oilfield-services company as measured by market share. The stock is trading 29% below our fair value estimate of $50 per share.

SLB focuses its strategy through three growth engines: core, digital, and new energy. Our thesis mostly relies on SLB’s first two growth engines, specifically its offshore business outside of North America and its digital offerings. Market bears seem concerned over a possible recession, a slowdown in the exploration and production capital expenditure cycle, and that the acquisition of ChampionX dilutes shareholder value. We disagree that ChampionX diluted value and think parts of the cycle could be more resilient than the market appreciates.

The cycle is indeed turning in North America amid customer consolidation. We also expect the broader market will face reductions in discretionary short-cycle spending given concerns about an oversupplied oil market, weak demand in China, and an economic slowdown from tariffs. Still, the fundamentals underlying long-term, international offshore spending look largely intact.

From this standpoint, SLB is well positioned since it’s the premier global oilfield-services company. It boasts an oligopolistic foothold in some of the most attractive market segments thanks to its record of innovation. Furthermore, over three-fourths of its business is exposed to markets outside North America. Industry figures frequently cite roughly $100 billion in final investment decisions in 2026. Despite near-term headwinds, the Middle East and deep-water projects in Latin America and West Africa strike us as among the most attractive long-term opportunities, and we think SLB will capture its healthy share of project wins.

SLB also holds an industry-leading position in digital, whose revenue is sticky, highly accretive to margins, and decoupled from cyclical headwinds. Digital enjoys these attributes because it helps reduce customers’ cycle times while also lowering their cost of production. We believe SLB’s digital revenue will grow at a double-digit compound annual growth rate through our forecast.

We fully credit SLB with extracting $400 million in annualized pretax synergies by 2028, which we model at a 100% probability. If we’re right, we think the acquisition will create over $2 billion in shareholder value.

Read more about SLB here.

Halliburton

• Morningstar Price/Fair Value: 0.73
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.11%
• Industry: Oil and Gas Equipment and Services

Halliburton is North America’s largest oilfield-services company as measured by market share. Trading 27% below our fair value estimate, Halliburton has an economic moat rating of narrow. We think this stock is worth $30 per share.

After a century of operations, Halliburton is the world’s premier wellbore engineering firm. The company made a historic bet on US shale, which ensured its position as North America’s premier oilfield-services company. The company tailors its pressure-pumping solutions to drive down producers’ development costs.

The advantages here are fleeting and require constant innovation in an increasingly smaller profit pool. Still, we think Halliburton will remain in a leadership position. Outside capital remains uninterested in funding would-be competitors following prior boom-and-bust cycles. Both US producers and services firms are now far more capital-disciplined. Producer discipline ensures good utilization rates for Halliburton’s equipment and creates a more certain operating environment for integrated services firms with scale.

Halliburton also generates strong internal cash flow that funds differentiated solutions with pricing power. In pressure pumping, the solution we like best is its electric fracturing equipment. Despite the higher upfront cost, customers value this equipment since it lowers their total cost of ownership and reduces their emissions.

Halliburton also holds a solid competitive position in drilling and evaluation, trailing only SLB. These solutions are less moaty than its completions solutions. But, they still command differentiation, particularly in drilling. Halliburton’s latest generation rotary steering solution should deliver pricing power and decent incremental returns. Drilling’s growth outlook should also improve longer-term, given the lower inventory of drilled but uncompleted wells in the US. Many of these wells remain unviable for production.

Finally, the near-term outlook for US shale looks bleak, especially following secondary tariff-related impacts. US capital spending is far more short-cycled and susceptible to commodity price swings. So, Halliburton’s offshore business outside of North America will carry greater importance. Offshore international is roughly only a fourth of its revenue mix. But, we still think the firm remains well positioned here given its strong execution on complex completions with higher revenue content.

Read more about Halliburton here.

Oneok

• Morningstar Price/Fair Value: 0.74
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 5.54%
• Industry: Oil and Gas Midstream

Next on our list of the best energy stocks to buy is Oneok. Oneok is a diversified midstream services provider specializing in natural gas gathering, processing, storage, and transportation, and natural gas liquids transportation and fractionation. The stock is trading at a 26% discount to our fair value estimate of $100 per share.

Oneok has competently and effectively navigated its recent transformation by buying Magellan, EnLink, and Medallion. The firm is on track to meet its initial synergy targets, providing further value from assets that were acquired at favorable prices. Oneok’s near-term focus will revolve around integrating the acquisitions into its broader portfolio and making incremental investments, all while reducing debt.

The acquisitions open new opportunities for incremental investment to enhance volumes passing through its network. Multiple projects are in process, concentrated in the natural gas liquids segment. These projects will significantly boost volumes, adding 335,000 barrels per day of fractionation capacity and 540,000 barrels per day of pipeline capacity by 2027. Much of this investment is needed as Williston basin takeaway capacity for NGLs has been running up against constraints. The Williston also provides some of the most lucrative investment opportunities as Oneok is essentially the only pipeline out for Y-Grade NGLs, or raw feed NGLs for a fractionation facility. It can price its services just below what it costs to ship out Y-Grade by rail. Continued strong production in the Permian also supports Oneok’s decision to expand capacity there, taking liquefied petroleum gas to the Gulf Coast. Over the next few years, we expect these projects will boost segment EBITDA by more than $500 million.

Additional growth opportunities for the natural gas business will likely emerge, with Mexico being the closest to realization. After selling off 1.9 billion cubic feet per day of capacity in the Midwest at the end of 2024, Oneok will replace it by connecting 2.8 billion cubic feet per day of existing natural gas assets in the Permian to a Mexican pipeline that will feed an LNG production facility on the West Coast. Natural gas in the Permian is essentially stranded and has even sold at negative values in recent years. By connecting the gas to an international network and export facility, Oneok enjoys substantial room for lucrative growth.

Read more about Oneok here.

Occidental Petroleum

• Morningstar Price/Fair Value: 0.79
• Morningstar Uncertainty Rating: Very High
• Morningstar Economic Moat Rating: None
• Forward Dividend Yield: 2.09%
• Industry: Oil and Gas Exploration and Production

Occidental Petroleum is an independent exploration and production company with operations in the United States, Latin America, and the Middle East. Occidental stock is trading at a 21% discount to our fair value estimate of $58 per share.

Occidental is one of the world’s largest independent oil and gas producers. Its upstream operations are spread across the US, the Middle East, and North Africa. It has a consolidated midstream business, which provides gathering, processing, and transport services to the upstream segment, and it holds a majority equity interest in Western Midstream. The portfolio also includes a chemicals business, which produces caustic soda and PVC. The latter segment benefits from low energy and ethylene costs, while the strength of the broader economy determines its profitability.

The $55 billion Anadarko deal was a massive undertaking for Oxy, which itself had an enterprise value of about $50 billion at the time. The cash portion was partly financed with a $10 billion preferred equity investment from Berkshire Hathaway along with the proceeds from the sale of Anadarko’s Mozambique assets, which Total purchased for $3.9 billion in late 2019. While these arrangements left Oxy with a heavy debt burden before the pandemic, drastic measures helped management steady the ship, and the firm took full advantage of the subsequent rebound in commodity prices, generating enough cash to fully repair the balance sheet and pave the way for significant capital returns. The firm is obligated to match distributions above $4 per share annually with preferred equity redemptions.

The midstream segment also includes Oxy Low Carbon Ventures, which partners with third parties to implement carbon capture, storage, and utilization projects. This activity differentiates Occidental from most peers, which merely focus on curtailing their emissions. Oxy’s experience sequestering carbon dioxide for enhanced oil recovery potentially enables it to go further. Management has ambitious plans to develop direct air capture facilities that should also generate incremental revenue.

Finally, Oxy closed the roughly $12 billion CrownRock acquisition in 2024. This acquisition provides Oxy with a high-grade asset portfolio and allows it to add significant production capacity in the Midland Basin. While this acquisition comes at an elevated capital cost, we think it will help create firmwide operating efficiencies.

Read more about Occidental Petroleum here.

NOV

• Morningstar Price/Fair Value: 0.80
• Morningstar Uncertainty Rating: Very High
• Morningstar Economic Moat Rating: None
• Forward Dividend Yield: 2.33%
• Industry: Oil and Gas Equipment and Services

NOV (formerly National Oilwell Varco) is a leading supplier of oil and gas drilling rig equipment and products, such as downhole tools, drill pipe, and well casing. This cheap energy stock looks 20% undervalued and has a fair value estimate of $16 per share.

NOV is a large diversified oilfield-services supplier that competes with SLB, Halliburton, and Baker Hughes. It grapples with the Big Three in many end markets, but its significant presence in equipment manufacturing sets it apart. NOV is the largest original equipment manufacturer of rig systems for oilfield-services providers in onshore and offshore markets. It has maintained majority market share for two decades, controlling over half the market.

Numerous industry dynamics, including the 2015 oil price crash, reduced capital spending by exploration and production firms, and technological advancements by services providers have steadily reduced demand for new rig equipment, a trend we expect to persist. NOV has since diversified into more traditional oilfield-services markets as a result.

NOV relies on strategic acquisitions to diversify its product portfolio, specifically through its energy products and services segment, which account for the remaining sales. As a result, the firm now operates in more traditional oilfield-services markets, which are more fragmented and price-competitive. NOV must remain technologically evolved in a rapidly advancing space in order to stay relevant with contractors. It intends to continue strengthening its technological capabilities through further bolt-on acquisitions in lieu of in-house research and development. Given the highly competitive nature of the oilfield-services market, particularly onshore, we don’t expect future acquisition activity will generate significant value.

High price competition requires NOV to maximize its operational efficiency in order to expand its profit margins. Since 2016, the firm has halved both its asset base and its fixed costs. Further operational rightsizing will improve margins over time, especially as NOV moves away from more capital-intensive rig manufacturing operations. Supply chain disruptions continue to fetter the firm’s access to key production inputs, but these have been easing lately.

Read more about NOV here.

ExxonMobil

• Morningstar Price/Fair Value: 0.83
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.55%
• Industry: Oil and Gas Integrated

ExxonMobil is an integrated oil and gas company that explores for, produces, and refines oil worldwide. Trading 17% below our fair value estimate, ExxonMobil has an economic moat rating of narrow. We think this stock is worth $135 per share.

Exxon is departing from industry trends by increasing spending to deliver $20 billion in earnings growth by 2030. Although the higher spending might sound alarming given the industry’s history of pursuing growth at the expense of returns, Exxon’s differentiated portfolio should enable it to do so while maintaining capital discipline and delivering returns. Its differentiated Guyana position and enlarged Permian position remain at the core of its portfolio, which offers capital-efficient volume and earnings growth. Meanwhile, the breadth of its downstream businesses opens new low-carbon business opportunities.

Going beyond the headline of increased spending—$27 billion to $29 billion in 2025 and $28 billion to $33 billion annually from 2026 to 2030—reveals hydrocarbon investment will remain flat even as production grows from 4.3 million barrels of oil equivalent per day in 2024 to 5.4 million barrels of oil equivalent per day in 2030. This is thanks to over 70% of upstream investment going toward the Permian, Guyana, and LNG, where Exxon has realized material capital efficiency gains. These areas should also deliver margin expansion, adding $9 billion in earnings.

Unlike some peers, Exxon will continue to grow Permian volumes from 1.5 million barrels of oil equivalent per day in 2025 to 2.3 million barrels of oil equivalent per day in 2030.

Based on volume growth and cost reductions, another $8 billion of earnings growth will come from product solutions—refining, chemicals, and specialty products.

By 2030, Exxon expects to deliver about $3 billion in earnings from new businesses in the production solutions and low-carbon segments, which span resins, low-emission fuels, carbon capture and storage, lithium, and low-carbon hydrogen. Spending on these lower-emissions areas totals $30 billion through 2030 but requires policy support and market development. Thus, if the earnings don’t materialize, Exxon won’t invest.

The large portion of short-cycle spending, including the Permian, affords Exxon flexibility in the event of lower prices. Even so, with the current plan, growing cash flow results in falling reinvestment rates to 2030 and a $30 per barrel dividend breakeven. So, as the higher spending breaks with peers, the earnings and cash flow growth and delivery of higher returns justify it.

Read more about ExxonMobil here.

Energy Transfer

• Morningstar Price/Fair Value: 0.84
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: None
• Forward Dividend Yield: 7.50%
• Industry: Oil and Gas Midstream

Energy Transfer owns one of the largest portfolios of crude oil, natural gas, and natural gas liquids midstream assets in the US, primarily in Texas and the US midcontinent region. This cheap stock looks 16% undervalued and has a fair value estimate of $21 per share.

Energy Transfer is one of the largest energy firms in the US with exposure to all types of businesses and markets, from refined products to crude oil to liquefied natural gas, through its expansive midstream network.

Energy Transfer’s most recent growth opportunities include supplying natural gas to power generators and satisfying global demand for natural gas liquids. Energy Transfer is set to ramp up its growth investments substantially. Management plans to invest $5 billion in organic growth projects in 2025, and we expect similar amounts in the next few years. This is up from $2 billion to $3 billion of annual organic growth investment in recent years.

With the anticipated growth in US electricity demand, particularly in Texas, Energy Transfer has focused on connecting its assets to power plants located within 10 miles of its intrastate pipelines. Energy Transfer serves 185 power plants directly or indirectly today and could boost that number significantly in the next few years. Management also reports early interest from data centers that want to bypass utilities and contract direct energy supply.

We also expect high returns out of its planned investments at its NGL terminals, notably Mont Belvieu and Nederland. Low gas and processing costs in the US give these export facilities a global competitive advantage.

Energy Transfer has a long history of mergers and acquisitions, but that could slow as the company increasingly allocates capital to organic growth investment. This could be a positive for unitholders by alleviating worries that Energy Transfer will overpay for acquisitions.

Energy Transfer has long been a target of environmental activists. In part to offset these concerns, Energy Transfer has invested in renewable energy and carbon capture both on its own system and for customers. It also plans to add 80 megawatts of natural gas-fired electric generation in 2025 and 2026 to improve its system reliability during periods of extreme weather.

Read more about Energy Transfer here.

Devon Energy

• Morningstar Price/Fair Value: 0.84
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 2.72%
• Industry: Oil and Gas Exploration and Production

Devon Energy is an oil and gas producer with acreage in several top US shale plays. The firm earns a narrow economic moat rating, and the shares of its stock look 16% undervalued relative to our $42 fair value estimate.

In 2018, Devon Energy embarked on a series of shrewd capital allocation moves that included selling its EnLink Midstream interest, divesting its Canadian heavy oil and Barnett Shale interests, and merging with WPX Energy. This allowed Devon to recycle cash by shedding interests that were either noncore or higher on the cost curve. Recycled cash allowed Devon to meaningfully pivot toward the Delaware and enjoy newfound exposure in the Bakken. Previously, Canadian heavy oil and the Barnett Shale made up 40% to 50% of its production.

Today, Devon is among the lowest-cost providers on the US shale cost curve, along with Diamondback Energy and EOG Resources. Devon’s reconstituted portfolio is buoyed by its presence in the Delaware, which has some of the lowest breakeven costs among US basins. About two thirds of the firm’s production is tied to this premier asset, which helps Devon command favorable well production relative to peers. We expect management to continue allocating capital here; it signaled that over 50% of its roughly $4 billion in capital expenditure will be allocated to the Delaware in 2025.

But Devon is more than just a single-basin play. It has a meaningful presence in four of the top five US shale basins by lowest breakeven costs: the Williston, the Eagle Ford, and the Anadarko basins. Exposure to high-quality assets with a near 17-year remaining inventory life, coupled with operational improvements from initiatives like longer laterals, should allow Devon to enjoy modest production growth. Importantly, we expect production gains will come at increasingly attractive drilling and completion costs.

We think Devon completed its reset with its revised capital allocation framework in late 2020. That framework was the first to implement a fixed plus variable dividend. In 2025, Devon’s capital allocation framework calls for returning 60% of its free cash to shareholders. Consequently, the board approved a 9% increase to Devon’s fixed dividend starting in the first quarter of 2025.

Read more about Devon Energy here.

Baker Hughes

• Morningstar Price/Fair Value: 0.89
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: None
• Forward Dividend Yield: 2.07%
• Industry: Oil and Gas Equipment and Services

Oil and gas equipment and services company Baker Hughes rounds out our list of best energy stocks to buy. Following a 2022 reorganization, Baker Hughes operates in two segments: oilfield services and equipment, and industrial and energy technology. The stock is 11% undervalued relative to our fair value estimate of $50 per share.

Baker Hughes was formed in 2017 through the combination of General Electric’s oil and gas segment and legacy Baker Hughes. While the merger was expensive, it created a global equipment and service powerhouse, supplying multiple solutions across the energy sector and adjacent markets.

We believe the rationale for bringing these assets together made sense then and continues to today. The combination gives Baker Hughes a stronger footing with key global customers; it allows customers to deal with one vendor and enables the company to craft unique solutions that differentiate it from peers. These solutions focus on meeting the world’s energy demands cost-effectively and securely while minimizing the impact of emissions.

Our Baker Hughes thesis rests primarily on the company’s industrial and energy technology, or IET, segment. Of all the trends that IET benefits from, perhaps none is greater than the booming growth in liquefied natural gas capacity. We believe this need will continue, given demand from fast-growing economies, the geopolitical risk Russia poses to Europe’s energy security, and energy requirements from data centers powering AI.

Based on new liquefaction projects coming online that are either under construction or approved by well-financed sponsors, global LNG production capacity could grow by over 35% from 2024 to 2028. We expect Baker Hughes to win 90% of these projects, which we’ve heard typically range from $30 million to $70 million for each million tons per year awarded. Turbine sales powering these facilities come with a higher-margin service tail, enjoying high attachment rates that can last more than two decades.

IET is more than just an LNG story, however. Baker Hughes is a market leader in advanced compression technology, which is also used to transport natural gas through pipelines, and has a similarly strong aftermarket component. Baker Hughes is wisely using its money to buy Chart Industries, which helps reduce potential financial risks. This acquisition will strengthen its position in growing markets like LNG, data centers, and environmentally friendly solutions. Additionally, it will provide consistent income from ongoing service and parts sales.

Read more about Baker Hughes here.

How to Find More of the Best Energy Stocks to Buy

Investors who’d like to extend their search for top energy stocks can do the following:

• Review Morningstar’s comprehensive list of energy stocks to investigate further.
• Stay up to date on the energy sector’s performance, key earnings reports, and more with Morningstar’s energy sector page.
• Use the Morningstar Investor screener to build a short list of energy stocks to research and watch.
• Read the latest news about notable energy stocks from Morningstar’s Joshua Aguilar.
• Check out Morningstar’s Guide to Stock Investing to learn how our approach to investing can inform your stock-picking process.

James Ubi contributed to this article.