Whether you see them or not, energy businesses play a crucial part in our daily activities, from powering our homes and businesses to powering our transportation and industries.They are also bound to benefit from a friendlier regulatory environment with the “American energy dominance” stance of the Trump administration, and this excitement has led to a six-month gain of 12.6% for the sector - higher than the S&P 500’s 6.3% return.
Regardless of these results, investors should tread carefully. The diversity of companies in this space means that not all are created equal or well-positioned for the inescapable downturn. Keeping that in mind, here is one energy stock boasting a durable advantage and two that may face trouble.
Two Energy Stocks to Sell:
Northern Oil and Gas (NOG)
Market Cap: $2.20 billion
Taking the path less traveled in the oil industry by choosing not to operate its own wells, Northern Oil and Gas (NYSE: NOG) acquires minority stakes in oil and gas wells operated by other companies across major U.S. shale basins.
Why Are We Wary of NOG?
- Costs have risen faster than its revenue over the last five years, causing its EBITDA margin to decline by 3.2 percentage points
- 15× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Northern Oil and Gas’s stock price of $20.35 implies a valuation ratio of 5.1x forward P/E. To fully understand why you should be careful with NOG, check out our full research report (it’s free).
DHT Holdings (DHT)
Market Cap: $2.95 billion
With each vessel capable of carrying roughly 2 million barrels of oil—enough to fill about 125 Olympic swimming pools—DHT Holdings (NYSE: DHT) operates very large crude carriers that transport crude oil across international routes for energy companies and traders.
Why Does DHT Fall Short?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Revenue base of $448 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Costly operations and weak unit economics result in an inferior gross margin of 33.4% that must be offset through higher production volumes
At $18.29 per share, DHT Holdings trades at 5.9x forward P/E. Check out our free in-depth research report to learn more about why DHT doesn’t pass our bar.
One Energy Stock to Watch:
California Resources (CRC)
Market Cap: $4.51 billion
Operating some of California's most productive oil fields including Elk Hills and Belridge, California Resources (NYSE: CRC) explores for and produces crude oil, natural gas, and natural gas liquids from fields across California.
Why Are We Positive on CRC?
- Market share has increased this cycle as its 17.3% annual revenue growth over the last five years was exceptional
- Excellent production efficiency results in a premier gross margin of 57.2%
- CRC is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
California Resources is trading at $50.50 per share, or 10.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
