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.Still, their generally high capital requirements expose them to the ups and downs of commodity prices and economic cycles, and the industry’s six-month return of 7.5% has fallen short of the S&P 500’s 12.1% rise.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. On that note, here are two energy stocks we think can generate sustainable market-beating returns and one that may face trouble.
One Energy Stock to Sell:
World Kinect (WKC)
Market Cap: $1.83 billion
Serving over 150,000 customers from commercial jets to cargo ships to heating oil consumers, World Kinect (NYSE: WKC) procures and delivers fuel and energy products to airlines, shipping companies, trucking fleets, and industrial businesses worldwide.
Why Do We Avoid WKC?
- Gross margin of 2.3% is below its competitors, leaving less money to invest in exploration and production
- Low free cash flow margin of 0.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
World Kinect’s stock price of $35.74 implies a valuation ratio of 12.8x forward P/E. If you’re considering WKC for your portfolio, see our FREE research report to learn more.
Two Energy Stocks to Watch:
Helmerich & Payne (HP)
Market Cap: $4.36 billion
Operating the largest fleet of super-spec rigs in North America with technology that can drill horizontal wells over two miles long, Helmerich & Payne (NYSE: HP) provides drilling rigs and crews to oil and gas companies that need wells drilled to extract hydrocarbons from underground.
Why Does HP Catch Our Eye?
- Impressive 30.3% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Economies of scale give it more fixed cost leverage than its smaller competitors
- EBITDA margin improvement of 6.3 percentage points over the last five years demonstrates its ability to scale efficiently
At $42.98 per share, Helmerich & Payne trades at 30.7x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Riley Exploration Permian (REPX)
Market Cap: $864.7 million
Operating in counties where legacy oil fields have been producing since the early 1900s, Riley Exploration Permian (NYSE: REPX) drills for and produces oil and natural gas from horizontal wells in the Permian Basin of West Texas and New Mexico.
What Makes REPX Stand Out?
- Annual revenue growth of 30.8% over the past eight years was outstanding, reflecting market share gains this cycle
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 76.4%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Riley Exploration Permian is trading at $39.02 per share, or 5x forward P/E. Is now the right time to buy? Find out 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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
