You know I don’t like to use hyperbole.
That’s never been my style.
But I can tell you with 100% sincerity that I don’t remember seeing a broad market sector more “Bullish” than energy today.
That’s not just my opinion.
You see, the raw numbers back it up…
Of the 20 energy stocks in the S&P 500 Index, 17 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 three rate as “Neutral,” meaning my system would expect them to perform more or less in line with the broader market.
And zero – not a single one – currently rates as “Bearish.”
My system is sending an unambiguous message: We should be invested in energy stocks.
This doesn’t mean we should shun other strong-performing sectors like technology, or that we should invest only in energy. Normal, common-sense rules on risk management and spreading your bets still apply.
But if you don’t have energy in your portfolio… you’re missing out on a huge moneymaking opportunity!
This is not about Iran.
No, the destruction of Middle Eastern oil infrastructure and the closure of Hormuz aren’t exactly bad things for American energy companies. But this sector was trending “Bullish” long before the bombs started falling or before the average American had ever heard the word “Hormuz.”
As for the reasons, take your pick…
The massive investment in AI infrastructure by the “Magnificent Seven” and others consumes gargantuan amounts of power, as does the onshoring of manufacturing brought about by the collapse of U.S.-China relations.
Globalization is out… national self-sufficiency is in. And building out domestic energy infrastructure is part of that story.
Alternative energy sources like solar and wind have their place but lack the reliability of good, old-fashioned oil and gas. Yet the billions invested in alternative energy over the past 20 years often came at the expense of new fossil fuel investments. So, the sector has a lot of catching up to do.
And finally, there’s the fact that energy is almost ridiculously undervalued right now. The energy sector accounts for only 3.5% of the S&P 500 by market cap. Nvidia (NVDA) – by itself – makes up just shy of 8% of the S&P 500. And Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN) and Alphabet (GOOGL) are all individually larger than the entire energy sector.
When a sector is that small and underowned, it doesn’t take much new buying to send shares sharply higher, and that’s what we’ve seen this year. Of the 11 major industrial sectors, energy is the best-performing in 2026, up almost 33%. (Tech is in second place, up about 22%).
Let’s keep digging into the energy sector to see what insights we can glean…
Where Do Energy Stocks Pick Up Points?
The Green Zone Power Rating 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. (As we are looking at large-cap constituents of the S&P 500, I don’t consider size when doing the sector X-ray.)
Let’s take a look at where energy stocks are putting points on the board.
The first takeaway is that the sector is remarkably balanced. Each of the five factors has 12 to 18 “Bullish” rated stocks.
Perhaps surprisingly, given that the prices of oil and gas can have wild swings, the sector rates particularly well on its volatility factor. Eighteen out of the 20 stocks rate as “Bullish” on volatility, meaning their factor rating is 60 or higher.
And not surprisingly at all, given how strongly the sector has performed this year, 17 out of 20 rate as “Bullish” on momentum.
Sure, the Iran war has introduced some new choppiness to the sector. But as I explained earlier, energy was trending higher long before the hostilities commenced.
So, let’s talk about that…
I ranked the energy stocks by their momentum score from highest to lowest. Let’s take a peek at the highest-momentum stocks in the sector.
The Energy Stocks With the Highest Momentum
Many of these names should look familiar to you. They’ve popped up on various “Bullish” screens over the past several months.
Perhaps the most striking aspect is how diverse the list is. This isn’t a case of one particular subsector blasting higher. We have “a little bit of everything” here.
We have exploration and production companies like APA Corp (APA)… and oilfield servicers like Baker Hughes (BKR). These are the top two energy stocks based on their momentum scores.
We also have fully integrated supermajors like ExxonMobil (XOM) and Chevron (CVX), pipeline operators like Targa Resources (TRGP), and refiners like Valero (VLO).
It’s all trending higher.
Given the broadness of the rally, a sector ETF like the State Street Energy Select SPDR ETF (XLE) is a solid option.
But for investors who prefer to focus on the market’s strongest individual opportunities rather than buying the entire basket, my Green Zone Fortunes subscribers use the Green Zone Power Ratings system to zero in on the highest-rated names in any sector. In a volatile market like this one, that kind of accuracy can make all the difference.
For now, the trend in energy remains firmly intact — and as long as the strongest names continue to lead, this is a sector investors shouldn’t ignore.
To good profits,
Adam O’Dell
Editor, What My System Says Today
P.S. Today’s market has become increasingly difficult for traditional investors to navigate. Big swings, nonstop headlines and rising living costs have left folks wondering how to generate meaningful returns without constantly guessing where the market moves next.
That’s exactly why I’ll be hosting a LIVE event at 1 p.m. ET today — to show you a different approach built around simple, repeatable “deals” designed to create consistent cash flow regardless of what’s happening in the market.
During the presentation, I’ll walk through the process live on screen, showing exactly how these deals are identified and executed step by step, while answering questions in real time along the way.