The wind of energy stocks has arrived; these 7 leading US stocks are worth paying attention to

In 2022, Europe decided to impose a 25% windfall profit tax on energy companies. This signal is very clear: the global energy supply landscape is being reshaped. From pandemic shocks, geopolitical conflicts, to inflation pressures, energy stocks have long evolved from passive cyclical assets to active offensive tools. If you are still on the sidelines, it’s better to first clarify the deep driving forces behind this round of energy stock rallies.

The Three Core Drivers Driving Up Energy Stocks

The continued rise of energy stocks since 2021 is no coincidence.

Fiscal stimulus + inflation pressure are the primary drivers. Post-pandemic stimulus policies in various countries have caused excess liquidity, and material shortages have further boosted energy demand and prices. This spiral logic still persists today.

Geopolitical conflicts reshape the global energy supply chain. The Russia-Ukraine conflict directly cut off Europe’s natural gas supply lifeline, causing European demand for U.S. liquefied natural gas (LNG) to surge. This not only pushed up global natural gas prices but also strengthened the U.S.'s influence in global energy markets.

The rise of U.S. energy production is rewriting the market landscape. The development of unconventional oil and gas resources like shale oil and shale gas has significantly increased U.S. energy self-sufficiency, with exports also growing rapidly. As the dollar is the pricing currency for oil, this further consolidates U.S. influence over global energy pricing.

Key Targets: From Traditional to Emerging

U.S. Crude Oil(USOIL): The Rise of Western Standards

Compared to Brent crude (OPEC benchmark), U.S. crude oil represents the energy pricing power of the Western Hemisphere. The reason for choosing U.S. crude is simple:

The U.S. economy’s recovery ability clearly surpasses Europe, and a strong manufacturing revival will inevitably boost energy demand. Economic growth and energy consumption are positively correlated, and the resilience of the U.S. determines its continued pull on crude oil.

Since 2021, U.S. energy supply to Europe has surpassed traditional benchmarks. The global pricing power of U.S. crude oil continues to rise, while Brent’s market influence is relatively declining. In the long run, the growth potential of U.S. crude oil is more worth paying attention to.

U.S. Power(AEP.US): Core Asset for Stable Supply

U.S. Power is the largest integrated power company in the United States, with 42 GW of installed capacity, 38,000 miles of transmission lines, and 186,000 miles of distribution lines. The company also controls 128 billion cubic feet of natural gas reserves, 6,300 miles of natural gas pipelines, and 7,000 train tank cars and 1,800 barges, serving 11 states and 5 million customers.

The extreme weather in Texas in 2021 led to Texas power bankruptcy. What is the lesson behind it? The fragility of energy supply. U.S. Power is worth watching because it controls ample fossil fuel supplies. Cost control means stable profit margins, which is especially critical amid the recovery of high-end manufacturing in 2023—stable power supply is the lifeline of manufacturing.

ExxonMobil(XOM.US): Absolute Leader in Traditional Fossil Energy

ExxonMobil is the largest U.S. and top global oil company. The scale and size of this giant say it all:

Mineral exploration rights in 30 countries, with annual production of over 128 million tons of crude oil and natural gas, and sales of petroleum products exceeding 265 million tons in 75 countries. As the world’s largest petrochemical company, it sells 17 million tons of petrochemical products annually. Its global power generation capacity exceeds 7,500 MW, making it one of the largest independent power producers in the world.

ExxonMobil operates the world’s largest export coal mine in Colombia, with coal mines in Australia and the U.S., and copper mines and smelting plants in Chile. This diversified resource allocation and global industrial chain layout help spread risks and ensure stable returns. As the top choice for energy investment in 2023, ExxonMobil’s position remains unshakable.

Duke Energy(DUK.US): History and Diversification

Founded in 1899, Duke Energy has been around for 124 years. Through continuous mergers and acquisitions, it has expanded its industry footprint. Its annual power generation approaches 20 GW, controlling 12,000 miles of interstate pipeline systems, serving over 11 million people across five states.

But the real highlight of Duke Energy is its diversified layout: liquefied natural gas (LNG) supply business, power plants and energy transmission in Australia and Latin America, active expansion in Europe, and ongoing growth in renewable energy within the U.S. This global and diversified industrial portfolio ensures sustainable revenue growth.

NextEra Energy(NEE.US): Leader in Clean Energy

If ExxonMobil represents the leader in fossil fuels, then NextEra Energy is the unquestioned choice in the clean energy era.

The company’s energy empire is divided into four segments: wind power, solar energy, nuclear power, and natural gas sales. Its wind power business leverages the geographic advantage of the U.S. Midwest plains (wind speeds of 7 m/sec). Its subsidiary FPL serves 5.6 million customers in Florida, contributing about 1/7 of the company’s revenue. The main wind and solar energy company NEECH (listed independently in 2018) contributes 6/7 of revenue and is the world’s largest wind and solar power generation company.

Two core reasons to be optimistic about NEE:

The global acceleration of clean energy is an irreversible trend. The EU proposed a complete ban on fuel vehicles by 2035, and countries are competing to seek energy independence and energy complementarity. Wind and solar power were the fastest-growing sources of electricity in 2021, accounting for 10% of the global power structure, with clean energy total generation share reaching 38%.

Frequent extreme weather events and the continuous acceleration of global energy conservation and emission reduction efforts ensure NEE’s long-term investment value through its early lead in wind and solar sectors. Although rising polysilicon raw material prices may be a constraint, the expansion of global giants is expected to gradually reduce raw material costs.

Lithium Americas(LAC.US): Hidden Champion in Energy Transition

Strictly speaking, Lithium Americas is a lithium resource company rather than a traditional energy company, but in the new energy era, the importance of lithium resources is self-evident.

Headquartered in Canada, it owns two brine resources in northwest Argentina and a clay resource in Nevada, USA. Although its scale is relatively small, its explosive potential is huge. As the world’s largest auto market, the U.S. is launching a new energy vehicle substitution process, and the scarcity and price of lithium resources are bound to enter an upward cycle. The performance and valuation will rise in tandem, bringing Lithium Americas a “Davis double play” opportunity.

Occidental Petroleum(OXY.US): The Fluctuating Acquirer

Founded in 1920 and headquartered in Los Angeles, Occidental Petroleum is the fourth-largest oil and natural gas company in the U.S. Its operations span the U.S., Middle East, North Africa, and South America.

In 2019, Occidental acquired Anadarko Petroleum for $38 billion, greatly expanding its footprint. Notably, Warren Buffett’s continued increased holdings in this company reflect market recognition of its long-term value.

The Real Risks of Investing in Energy Stocks

Energy stocks are attractive, but risks should also be carefully considered.

Cyclical fluctuations are unavoidable. The cyclical nature of the oil and gas industry means investors will experience booms and busts. This is in the industry’s DNA; it cannot be avoided, only adapted to.

Price volatility has far-reaching impacts. Changes in oil and gas prices directly affect company valuations, and prices often go beyond the control of companies. The oil price war in March 2020 caused a sharp decline in energy stocks, while the surge in oil prices after the Russia-Ukraine conflict in 2022 drove energy stock rallies. This unpredictable nature requires investors to remain cautious.

Exploration uncertainties carry hidden risks. Buying exploration blocks, conducting tests, drilling, and connecting infrastructure—all these processes involve uncertainties that can lead to huge losses.

Environmental pressures are long-term. The carbon emissions from fossil fuels lead governments worldwide to exert continuous pressure, and long-term demand may face suppression. This is not a short-term risk but a structural challenge that will persist for decades.

Conclusion: Larger Companies Have Lower Risks

Like other industries, larger-scale energy companies tend to have stronger risk resistance. The seven energy stocks introduced here cover traditional fossil fuels, clean energy, and emerging energy sectors. Investors can choose based on their risk preferences.

In the medium to short term, traditional energy stocks are more likely to seize current opportunities due to mature technology and markets. Emerging energy stocks require more time and patience. Regardless of the choice, understanding the driving logic and risk characteristics of energy stocks is fundamental to sound investment decisions.