Yesterday, I wrote about energy’s return to the top of the leaderboard.
After a particularly strong week, the State Street Energy Select SPDR ETF (XLE) is now the best-performing S&P 500 Index sector ETF of 2026, up more than 30% year to date.
Whether that signals a top in the broader tech-led market remains to be seen. But one thing is clear: my Green Zone Power Ratings system has been flashing “Bullish” signals on energy stocks for most of the year.
So, today we’re taking a closer look at the energy sector…
Rather than cover the same names we’ve already covered multiple times over the past few months, I’ve expanded my sector X-ray beyond the S&P 500 to include all 283 energy companies in the universe of stocks my system covers.
So, what does my system see in this expanded energy sector?
Let’s dig into the data and find out.
One thing is immediately obvious… Widening our selection certainly hasn’t made the sample any less “Bullish” in my Green Zone Power Ratings system.
In fact, 202 out of the 283 stocks in our expanded universe rate as “Bullish,” meaning they have a score of 60 or higher out of 100. (For those new to my Green Zone Power Ratings system, “Bullish” rated stocks outperform the S&P 500 by double on average over the following year.)
Another 34 rate as “Neutral,” meaning my system would expect them to perform more or less in line with the broader market. And only 47 rate as “Bearish.”
“Energy” doesn’t only refer to stocks that drill for oil and gas. This is a broad umbrella that includes pipelines, tankers and a host of other supplementary businesses that all coordinate to get that gallon of gas in your car’s tank.
So, which are the most attractive?
Let’s keep digging to find out!
Where Does Energy Pick Up Points?
The Green Zone Power Rating system is a composite score based on six primary factors: momentum, size, volatility, value, quality and growth, each of which is composed of several sub-factors.
Let’s take a look to see where energy stocks pick up points.
We’re seeing a lot of “Bullishness” across the board, but momentum is currently the strongest factor. At 219 stocks, full 77% of the sector rates as “Bullish” on its momentum factor.
That tells us that the market-leading performance of XLE isn’t simply the result of a few megacaps like ExxonMobil (XOM) or Chevron (CVX) pulling the sector higher. The sector as a whole is marching higher.
Despite how volatile energy prices can be, the sector rates exceptionally well on its volatility factor. (Remember, a high volatility factor rating means that the stock exhibits low volatility, or its price tends not to “bounce around” all that much.) Overall, 195 out of 283 energy stocks rate as “Bullish” on their volatility factor.
The weakest factor – quality – isn’t all that weak. At 115 stocks, it’s still a good 40% of the total.
The lower scores here make sense. My quality factor tends to reward “capital light” businesses that throw off a lot of cash with minimum investment in physical property, plant and equipment. Virtually everything related to energy is “capital heavy.” It’s an expensive undertaking to pull hydrocarbons out of the ground, refine and process them and then move them halfway around the world.
You could argue – and I have, in fact, in these very pages – that AI is changing the calculus and making “asset heavy” businesses more attractive. Call it the “HALO” trade: heavy assets, low obsolescence risk.
Claude or ChatGPT might blow up the business model of a software company, but they can’t pump natural gas into a pipeline or crude oil into a tanker. Over the past 30 years, Wall Street has shown a clear preference for low-capital businesses. I think it’s highly likely we’re in the early stages of a major revaluation that sees investors put a premium on physical “stuff.”
Highest-Rating Energy Stocks
Now, for the part you’ve been waiting for…
I ranked all of the stocks in the energy universe by their Green Zone Power Ratings and listed the top 20 highest-rated below.
A few things should immediately jump off the page. To start, we see a lot of foreign names here. Plus, we see a lot of tankers.
Tanker stocks can be volatile and are prone to wild price swings. But when they hit their stride, they can really enjoy a nice run.
And with the wars in Ukraine and Iran continuing to reorder the world’s energy flows, tankers are in the right business at the right time.
Longtime Green Zone Fortunes subscribers will recognize one familiar name: Teekay Tankers (TNK). I recommended the stock back in 2023, and it’s currently up a little more than 90%. Most of those gains have come over the past year.
Will the run continue?
Only time will tell. But you can see clearly that the stock rates as “Bullish” or “Strong Bullish” across each of its six factors and is one of the highest rated stocks I follow.
To good profits,
Adam O’Dell
Editor, What My System Says Today
P.S. Once the SpaceX IPO captures Wall Street’s attention, institutional investors will begin looking for the companies that make the entire operation possible.
And I believe one small American supplier sits in the sweet spot between the commercial space boom, Pentagon spending and the reshoring of advanced manufacturing. The opportunity may be greatest before the crowd connects the dots.
On Thursday, June 11, I’m going LIVE to reveal the company I believe is best positioned to capitalize on this unique setup — and why it may be one of the biggest moneymaking opportunities I’ve ever uncovered. Learn more here…