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.Their momentum is also rising as lower interest rates, as well as AI energy needs, have incentivized higher capital spending. As a result, the industry has posted a 19.5% gain over the past six months, beating the S&P 500 by 11.5 percentage points.
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:
Halliburton (HAL)
Market Cap: $33.22 billion
Behind nearly every oil and gas well drilled worldwide, Halliburton (NYSE: HAL) provides drilling, completion, and production services that help oil and gas companies extract hydrocarbons from underground reservoirs.
Why Are We Hesitant About HAL?
- Costly operations and weak unit economics result in an inferior gross margin of 16.8% that must be offset through higher production volumes
Halliburton’s stock price of $32.96 implies a valuation ratio of 13.6x forward P/E. Read our free research report to see why you should think twice about including HAL in your portfolio.
NOV (NOV)
Market Cap: $7.58 billion
With roots stretching back to 1862 when it began making equipment for early oil fields, NOV (NYSE: NOV) manufactures drilling rigs, drill bits, pumps, and other equipment used to drill oil and gas wells.
Why Are We Out on NOV?
- Sales tumbled by 3.3% annually over the last ten years, showing market trends are working against it during this cycle
- Gross margin of 20.3% is below its competitors, leaving less money to invest in exploration and production
- Poor free cash flow margin of 3.4% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
NOV is trading at $17.89 per share, or 17.9x forward P/E. To fully understand why you should be careful with NOV, check out our full research report (it’s free).
One Energy Stock to Watch:
Helmerich & Payne (HP)
Market Cap: $3.92 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 Is HP Interesting?
- Annual revenue growth of 32.2% over the past five years was outstanding, reflecting market share gains this cycle
- Economies of scale give it some operating leverage when demand rises
- EBITDA margin expanded by 11 percentage points over the last five years as it scaled and became more efficient
At $31.01 per share, Helmerich & Payne trades at 30.4x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
