Best Energy Stocks to Watch in February 2025

What to Know About the Energy Sector

As a group, energy stocks rose throughout fall 2024, spiking after the U.S. presidential election and falling toward the end of the year. In January, they recovered most of the ground given up during that time. Generally, energy stock prices often move in tandem with energy prices. For example, in 2022, amid the initial months of Russia’s invasion of Ukraine, energy prices peaked and many companies in the sector also experienced gains.

Production levels around the world are an essential factor in the performance of energy sector stocks. U.S. oil production is expected to increase under President Trump, although it has been at a high level for some time prior to the new administration. On the other hand, some OPEC+ countries have capped production. Analysts expect demand for energy products to continue to grow, driven by factors including increased reliance on high-usage services like cloud and artificial intelligence, among other things.

How We Chose the Best Energy Stocks

We screened for the best energy stocks by looking at all energy companies trading on either the Nasdaq or the New York Stock Exchange. From there, we included companies with a share price of at least $5, with daily trading volumes of 100,000 or more, and with a market capitalization of $300 million or higher. This is to ensure that our screen includes established firms in the energy industry.

Next, we ranked the remaining energy companies by 30-day return and identified the top-performing stocks based on that metric. We excluded any companies with negative returns during that period. Our screen includes stocks of energy companies and does not include products utilized directly in energy trading.

In our list, one of the stocks does not include a P/E ratio. This may be the case when a company has posted losses in the period in question or in the prior year period, making it impossible to calculate a P/E ratio.

Energy Stock Advantages and Disadvantages

The energy market is both gargantuan and growing, providing a significant potential benefit to investors. The global energy market is valued at about $6 trillion. Due to continued demand for energy to power factories, machinery, cars, and much more, companies are able to take part in the energy sector in many ways. This provides investors a range of options from which to choose within this large sector, including companies focused on energy production, transportation, distribution, storage, and more. Energy companies also exist in both traditional and more experimental corners of the market.

Demand for energy products is only likely to increase, and this is likely to drive growth in the size of the market into the future. The U.N. anticipates a global investment of $2.4 trillion per year over the coming decade in order to meet the goals of the Paris Climate Agreement. Renewable energy sources are becoming more popular and commonplace globally, offering investors a greater degree of variety in terms of the types of energy investment opportunities they experience.

There are also some important disadvantages and risks associated with energy sector investment. Fundamentally, many energy companies are heavily dependent upon the price of energy products; a crash in the market could be devastating, and even day-to-day volatility can make investing a challenge. As a highly complex, global market, energy can be difficult to assess for investors looking to identify strong options.

Further, many companies in the energy sector use products and practices that contribute significantly to climate change. Investors seeking companies with a strong history of meeting ESG standards may be limited in their approach in the energy sector.

While the stocks above are at the top of our list for this month, it’s important to remember that past performance does not guarantee future returns.

The Bottom Line

Energy sector companies include those focused on hydrocarbons, renewable energy, some utilities firms, and much more. Because they are often closely linked to the price of oil and other energy products, their share prices may be volatile. But the size of the market and the expectation of future growth make energy an enticing prospect for many investors.

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As of the date this article was written, the author does not own any of the securities listed above.