Even if they go mostly unnoticed, energy businesses are the backbone of our country, providing the energy we need to power our lives and businesses.But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates and commodity prices), and the market seems convinced that demand will slow. Due to this bearish outlook, the industry has tumbled by 2.4% over the past six months. This performance is a stark contrast from the S&P 500’s 18.4% gain.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. On that note, here are two energy stocks boasting durable advantages and one we’re passing on.
One Energy Stock to Sell:
Halliburton (HAL)
Market Cap: $27.5 billion
Behind nearly every oil and gas well drilled worldwide, Halliburton (NYSE:HAL) provides drilling, completion, and production services that help oil and gas companies extract hydrocarbons from underground reservoirs.
Why Does HAL Worry Us?
- Costly operations and weak unit economics result in an inferior gross margin of 16.8% that must be offset through higher production volumes
Halliburton’s stock price of $33.07 implies a valuation ratio of 12.9x forward P/E. To fully understand why you should be careful with HAL, check out our full research report (it’s free).
Two Energy Stocks to Watch:
Cactus (WHD)
Market Cap: $4.60 billion
Named for the spiky wellhead equipment that reminded founders of desert cacti, Cactus (NYSE:WHD) manufactures wellheads, valves, and spoolable pipes used in drilling and producing oil and gas wells.
Why Could WHD Be a Winner?
- Market share has increased this cycle as its 28.5% annual revenue growth over the last ten years was exceptional
- EBITDA margin failed to increase over the last five years, indicating the company couldn’t optimize its expenses
- Strong free cash flow margin of 21.7% enables it to reinvest or return capital consistently
At $66.05 per share, Cactus trades at 21x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Vitesse Energy (VTS)
Market Cap: $706.5 million
Taking a hands-off approach to energy production, Vitesse Energy (NYSE:VTS) owns non-operated stakes in oil and natural gas wells primarily in North Dakota and Montana's Williston Basin.
Why Is VTS a Good Business?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 14.9% annual sales growth over the last five years
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 80.2%
- VTS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Vitesse Energy is trading at $16.83 per share, or 73.3x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.