Top 10 Energy Stocks Of September 2024 (2024)

The energy sector powers the global economy—literally and figuratively. The rising prices of oil and natural gas makes this a great time to take a closer look at energy stocks, as countries reopen their economies and shift consumption to carbon-free sources of energy.

To help you understand this key market sector, we’ve profiled the 10 largest energy companies by market capitalization so you can decide which are right for your investment portfolio.

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• Best Energy Stocks of September 2024
• Exxon Mobil Corp (XOM)
• Chevron Corp (CVX)
• PetroChina Co Ltd (PTR)
• Shell PLC (SHEL)
• TotalEnergies SE (TTE)
• ConocoPhillips (COP)
• BP PLC (BP)
• Equinor ASA (EQNR)
• EOG Resources Inc. (EOG)
• Canadian Natural Resources Limited (CNQ)
• Understanding Energy Stocks
• Advantages of Investing in Energy Stocks
• Risks of Investing in Energy Stocks
• How to Buy Energy Stocks
• Energy Stock FAQs

*All data is sourced from StockRover, current as of June 6, 2024.

Energy sector stocks come from companies focused on the production and supply of energy products to the rest of the economy. They can also include companies providing services and equipment to energy producers. Some of the top categories for energy stocks include:

• Oil and natural gas stocks. These companies focus on finding new sources of oil and natural gas, extracting and processing the resources and supplying them to the economy. Their value comes not only from existing sales but also the worth of their untapped oil and gas reserves.
• Pipeline and refining stocks. Once oil and gas are extracted, they are still not ready for use. Refineries take the raw materials, like crude oil, and process them into fuel that’s ready for consumption. Pipeline companies transport oil, natural gas and processed products.
• Mining stocks. Coal is still a key source of energy and must be mined. The same goes for uranium, which fuels nuclear power plants.
• Renewable energy stocks. These are companies that focus on green sources of energy like solar, wind and geothermal.

Note: Companies aren’t limited to one category. In fact, it’s common for companies to have hands in many different categories within the energy sector. For example, a company could handle both the extraction, refining and transportation of oil while it also invests in renewable energy projects.

Huge markets that are crucial for the global economy. Energy is a major sector of the economy and accounts for trillions of dollars each year. The world economy needs power, creating sustained, long-term demand for the energy sector.

Potential for high dividends or company growth. When energy prices go up, energy companies can reap the benefits, like by earning significantly more per barrel of oil, even though their costs stay about the same. This is a chance for them to pay higher dividends to investors or to invest for future growth.

Growing global demand. As countries like China and India continue to develop, their need for energy will grow, too. This means there will be plenty of future demand both for existing energy sources like oil and gas as well as growing needs for alternative sources.

Diverse range of investments. While oil and natural gas stocks make up the largest share of energy stocks by market cap, they don’t represent the entire sector. By investing broadly in the energy sector, you can also get exposure to green stocks like solar or wind energy companies.

Possible rebound after a recession. The energy sector struggled throughout the Covid-19 pandemic, due to less travel and overall demand. Now that the world is beginning to reopen, there could be a new surge in travel, pushing up demand and prices for the best energy stocks.

Major environmental concerns. Oil, gas and coal companies are notorious for products that emit greenhouse gases, which worsen global warming. They also have other potential environmental issues, like oil spills. Not only is this an ethical concern, it also makes energy companies vulnerable to costly lawsuits, which can hurt your returns.

A volatile market. Energy prices can swing widely and rapidly, depending on the state of the global economy. For example, over the past 10 years the price of crude oil has gone from as high as nearly $110 a barrel to as low as less than $20 a barrel at the start of the Covid-19 pandemic. The value of energy stocks tends to track energy prices, making these investments more volatile and potentially riskier than stocks in other sectors.

Companies need to make big investments. It takes considerable resources to explore new sources of energy, like drilling for new oil wells, not to mention research and development for sustainable energy technology that may not always pan out. These financial drains can potentially harm your long-term returns if enough of them coalesce.

Extra regulatory risk. As the world ramps up the fight against global warming, global leaders could enact more regulations limiting the use and production of some sources of energy, like fossil fuels. On the other hand, green companies often rely on government subsidies for development, which don’t always come through, creating political risks on both sides of the energy sector.

Innovation and technology may reduce long-term demand. New sources of green energy, like solar, have become dramatically less expensive over the past decade. This is cutting into the demand for coal and could also start hurting demand for oil, gas and other traditional energy sectors, potentially jeopardizing their long-term value.

You can buy energy stocks in a taxable brokerage account or tax-advantaged retirement account, like an individual retirement account (IRA). If you don’t already have one of these accounts—or you aren’t satisfied with your current broker—check out Forbes Advisor’s list of the best online brokerages.

After careful research into the energy sector, you can purchase individual companies’ stocks using your preferred brokerage platform. Just keep in mind that even in the energy sector, individual stock picking is a risky bet—look at the range of returns in the companies above, and you can see that some have done much better than others.

Read More: How To Buy Stocks

That’s why experts recommend you take a diversified approach to investing. Rather than investing in just a few stocks, they say you should pick tens, hundreds or even thousands. This allows you to capture the highs of many companies while avoiding getting stuck with the pitfalls of just a few. Over time, this is designed to provide you with steady rising returns.

If that sounds like a hassle, you can simplify things by investing in energy sector index funds and exchange-traded funds (ETFs). You can find these using fund screeners at your brokerage. Or consider those that track major energy sector indexes, like the S&P 500 Energy.

The author(s) held no positions in the securities discussed in the post at the original time of publication.

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