In this article, we will discuss the 12 Most Promising Energy Stocks According to Analysts.
With the world pivoting towards cleaner energy sources and facing political uncertainties, 2025 can be a critical year for the broader energy sector. As per GlobalData’s Power Predictions 2025 report, numerous themes are expected to shape the global power landscape in 2025. These include geopolitical shifts influencing supply chains, developments in EVs, energy storage, hydrogen, and nuclear power. As per the Short-Term Energy Outlook released by the US Energy Information Administration, the generation in the US electric power sector is expected to increase by 2% in 2025 and by 1% in 2026, after rising 3% last year, driven by growth in renewable energy sources.
What Lies Ahead for the US Energy Sector?
As per AXA Investment Managers, the combination of increased demand and supply constraints resulted in a favourable backdrop for the broader US renewable energy sector. Furthermore, the lower cost and environmental benefits of renewable energy are some positive factors. Trump’s return to the White House kicked off with several executive orders. Apart from announcing a national energy emergency, he ordered the withdrawal from the Paris Agreement on climate change and rolled back the clean energy initiatives.
Despite such announcements, AXA Investment Managers expects the US clean energy sector to have potential investment opportunities, considering the increasing power demand. The US power demand growth remained weak between 2000 and 2020, averaging 1%. However, it is projected to increase from 2024 onwards. As per the investment management firm, a 2% – 3% increase in the growth rate per annum will be significant, reflecting a doubling or tripling of the historical rate. The overall US power demand can grow at a CAGR of 3.1% between 2020 and 2040, against 0.1% between 2010 and 2020. This higher demand will be supportive of the long-term trend, with potential investment opportunities, from power companies to the ones involved in the energy and equipment supply chain.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Trump’s Deregulation To Be a Critical Growth Factor
One of the President’s priorities revolves around reducing government bureaucracy and inefficiency. Notably, permitting new energy projects remained slow over the past few years because of understaffed government departments and burdensome environmental criteria, opines AXA Investment Managers. In an executive order on “unleashing American energy”, Donald Trump is focusing on reducing official rules and processes that seem unnecessary, and accelerating energy projects, constraining the remit of the NEPA (National Environmental Policy Act). Interestingly, most of the permit requirements stem from this act.
Overall, economics, growth and a continued climate of innovation and competition hint at the robust US power demand, which can also support the prospects of clean energy and its supply chains.
With this in mind, we will now look at the 12 Most Promising Energy Stocks According to Analysts.
An aerial view of a power plant, symbolizing the company’s investments in energy infrastructure sector.
Our Methodology
To list the 12 Most Promising Energy Stocks According to Analysts, we used a screener to find companies catering to the energy sector. Next, we chose the ones that analysts see the most upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of February 12. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
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12 Most Promising Energy Stocks According to Analysts
12) Shell plc (NYSE:SHEL)
Average Upside Potential: 19.8%
Number of Hedge Fund Holders: 48
Shell plc (NYSE:SHEL) operates as an energy and petrochemical company. Despite the reduced earnings in Q4 2024, cash delivery was solid and the company generated FCF of $40 billion across the year, higher than in 2023, in the lower price environment. Shell plc (NYSE:SHEL)’s continued focus on simplification supported delivering more than $3 billion in structural cost reductions since 2022. The company’s focus on disciplined capital allocation drove down 2024 cash capex to $21.1 billion.
Shell plc (NYSE:SHEL) expects its cash capex range for the full year 2025 to be lower than its 2024 range. The company’s renewables and energy solutions consist of activities like renewable power generation, marketing and trading, optimization of power and pipeline gas, carbon credits, and digitally enabled customer solutions. Notably, the global demand for LNG is expected to see a strong rise in the next few years, reported Reuters while quoting the scenarios published by Shell plc (NYSE:SHEL).
The company’s diversified portfolio, including upstream, downstream, and integrated energy solutions, enables it to adjust to shifts in the overall energy demand. The energy sector continues to witness growth in energy storage technologies and digitalization of energy management systems. Shell plc (NYSE:SHEL) has been making investments in smart grids and energy storage solutions which can place it as a leader in the evolving energy ecosystem.
11) Occidental Petroleum Corporation (NYSE:OXY)
Average Upside Potential: 23.3%
Number of Hedge Fund Holders: 71
Occidental Petroleum Corporation (NYSE:OXY) is engaged in acquiring, exploring, and developing oil and gas properties. Berkshire Hathaway remains highly optimistic about the company, with the conglomerate owning more than 28%. Buffett seems to be a believer in the long-term strength of oil and energy. While the global economies continue to pivot towards renewables, Warren Buffett believes that fossil fuels are expected to play a crucial role.
Occidental Petroleum Corporation (NYSE:OXY) continues to be a leader in carbon capture technology, an area that can make the company a key player in the energy transition. What makes this investment even more appealing are the government incentives and tax credits focused on carbon reduction. Elsewhere, JPMorgan upped the company’s stock price to $58 from $56, keeping a “Neutral” rating. In 2025, the firm anticipates that natural gas producers will benefit from 3 powerful secular demand trends.
These trends include building a significant LNG export capacity, higher power demand from electrification, and switching from coal to gas. Occidental Petroleum Corporation (NYSE:OXY)’s acquisition of CrownRock has aided the former in expanding its footprint in the Permian Basin, which is one of the most productive oil and gas regions in the US. The enhanced presence is expected to result in numerous benefits for Occidental Petroleum Corporation (NYSE:OXY)’s future performance.
10) Coterra Energy Inc. (NYSE:CTRA)
Average Upside Potential: 26.1%
Number of Hedge Fund Holders: 39
Coterra Energy Inc. (NYSE:CTRA) is an independent oil and gas company, which is engaged in the development, exploration, and production of oil, natural gas, and natural gas liquids. Roth MKM upped the company’s price target to $33 from $30, keeping a “Buy” rating as part of the broader research note on the energy sector. The firm increased its 2025 WTI oil price forecast by 1% to $71. While it expects marginal risk to the downside for oil prices because of likely supply increases from OPEC, it also sees that such increases might be offset by the loss of barrels in sanctioned countries such as Iran and Russia, maintaining a balance in the oil markets.
Furthermore, robust demand for natural gas from much higher LNG exports, together with gas-fired power generation and robust supply discipline from producers can support natural gas prices moving forward, says Roth MKM. Elsewhere, Raymond James upped Coterra Energy Inc. (NYSE:CTRA)’s price target to $41 from $35, maintaining an “Outperform” rating. The company’s efficiency gains in the Permian region offer a strong opportunity for future growth.
The Permian Basin has rich oil and gas reserves, and enhanced operational efficiency can result in higher production at lower costs. Therefore, a combination of increased output and lower expenses can fuel Coterra Energy Inc. (NYSE:CTRA)’s profit margins and cash flow generation.
