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 their prominence also brings high exposure to the ups and downs of economic and energy cycles. Luckily, the tide is turning in their favor as the industry’s 16.8% return over the past six months has topped the S&P 500 by 8.5 percentage points.
Although these companies have produced results lately, a cautious approach is imperative. When the cycle naturally turns, the losers can be left for dead while the winners consolidate and take more of the market. Taking that into account, here is one resilient energy stock at the top of our wish list and two we’re steering clear of.
Two Energy Stocks to Sell:
SLB (SLB)
Market Cap: $71.4 billion
What began in 1926 with two brothers logging the first electrical measurements in a well, SLB (NYSE: SLB) provides technology and services to help oil and gas companies locate reservoirs, drill wells, and produce hydrocarbons.
Why Do We Think Twice About SLB?
- Gross margin of 21.5% reflects its high production costs and unfavorable asset base
SLB’s stock price of $47.72 implies a valuation ratio of 17.4x forward P/E. Dive into our free research report to see why there are better opportunities than SLB.
Weatherford (WFRD)
Market Cap: $6.07 billion
Operating in roughly 75 countries with over 300 facilities worldwide, Weatherford (NASDAQ: WFRD) provides equipment and services for drilling, completing, and maintaining oil and gas wells.
Why Are We Cautious About WFRD?
- Annual sales declines of 5.1% for the past ten years show its products and services struggled to connect with the market during this cycle
- Costly operations and weak unit economics result in an inferior gross margin of 31.7% that must be offset through higher production volumes
Weatherford is trading at $86.00 per share, or 14.7x forward P/E. Read our free research report to see why you should think twice about including WFRD in your portfolio.
One Energy Stock to Watch:
Core Natural Resources (CNR)
Market Cap: $4.13 billion
Tracing its origins to 1864 and operating some mines southwest of Pittsburgh, Core Natural Resources (NYSE: CNR) mines and exports metallurgical coal used in steelmaking and thermal coal for power generation.
Why Could CNR Be a Winner?
- Annual revenue growth of 14.2% over the past nine years was outstanding, reflecting market share gains this cycle
- Economies of scale give it some operating leverage when demand rises
- Robust free cash flow margin of 12.7% gives it many options for capital deployment
At $81.97 per share, Core Natural Resources trades at 4.8x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
