By Steve Garmhausen
The Iran war sent oil and gas prices surging and sharpened investors' focus on energy investments. The question is how to play the sector: Some investors are leaning into traditional oil-patch names, while others favor pipelines and natural gas. Still others see opportunity in renewables and nuclear. For this week's Barron's Advisor Big Q, we asked a panel of investment professionals how they're putting money to work in energy now.
Peter Boockvar, chief investment officer, OnePoint BFG Wealth Partners
We were long energy stocks before the war, but just by luck we added to them in January. That's because when oil was $60 or $65 [a barrel], I felt it was one of the cheapest assets in the world. I was able to buy energy stocks with good earnings and good dividend yields at a depressed commodity price, obviously having no idea what was going to happen with the war. So, we've been riding the rally in energy, even though it has gotten choppy over the past month.
I've owned energy through the big exploration-and-production companies like BP, Canadian Natural Resources, and Occidental Petroleum. I'm long Noble on the drilling side. Prewar, my thesis was that there was going to be more drilling offshore. After the war started, I bought SLB, the old Schlumberger.
I'm even more bullish now because, assuming the war ends soon, $80 or $85 is the new $60 or $65. So, we're not pulling back that much. Energy has joined the commodity bull market that last year was highlighted by precious metals and industrial metals. So, we're holding on to our position. I think SLB is a great opportunity because of all the drilling, because I think you're going to have multiple years of global oil stockpiling for strategic reserves. Those countries that don't have reserves are going to build reserves, and it's not just going to be for oil and gas; it's going to be for a variety of commodities.
In terms of [new] opportunity, U.S. natural-gas prices have been subdued, even though exports are going to be even more important. And I think a lot of the worries people had before the war about too much [liquefied natural gas] supply have been put to bed. I think the price of natural gas is dirt cheap, and natural-gas stocks are a great opportunity here. Two natural-gas stocks we own are EQT and Range Resources. On the pipeline side, we're long TC Energy, which does a lot of business feeding pipes into LNG facilities.
Max Kulyk, CEO, Chicory Wealth
Our orientation is around socially conscious investing and ESG metrics. So, we're very interested in energy broadly, but specifically renewables. With the energy demand for artificial intelligence, and the Strait of Hormuz closure a reminder of the incredible vulnerability of oil and consumable fuel companies, there continue to be great opportunities across that green-energy spectrum. We have owned Constellation Energy and NextEra Energy for quite a while. Both continue to guide toward strong earnings growth. NextEra is in the process of a $67 billion merger with Dominion Energy, which would make it the largest regulated utility. We recently added Darling Ingredients. Darling is a global leader in recycling organic waste, cooking oil, and animal byproducts into renewable energy. It's particularly interesting given the pressure on diesel fuels. So, that's actually a new addition.
Our client base is politically progressive, so there has been this concern about positions in or adjacent to nuclear energy. But we continue to speak to our clients and hold a position, for example, like Cameco, a uranium producer, because we just don't see any way you get to the energy transition we need without nuclear. We have owned First Solar and Vestas Wind Systems for a long time, and they continue to provide steady revenue growth, despite our president's opposition to windmills. We also continue to be in the non-publicly traded space. We partner with a group called Citizen Mint, which is a platform for impact investments. We have made a number of investments over the past few years in things like senior secured financing that links solar development to the grid.
Richard Saperstein, principal, chief investment officer, Treasury Partners
Since 2022, the energy group has really altered their capital structure and deployment. They have paid down debt, rationalized capital expenditures, and swung to very strong operating cash flows and free cash flows after capex. Exxon Mobil and Chevron over the past four years have been returning approximately 5% to 6% a year of market cap to shareholders. They're spending capex, but they're still delivering free cash flows. That is dramatically different than we saw years ago. So, you can look at it fundamentally as a high-return-of-capital sector right now that has stronger balance sheets and more disciplined capital allocation.
We own the majors, particularly Chevron, but we also own Occidental Petroleum: Ninety percent of its reserves are in the U.S., and it's generating significant surplus cash, which it's using to pay down debt. The other name we own is the Canadian producer Canadian Natural Resources. CNQ is a low-cost operator. It benefits from higher commodity prices and has historically been very shareholder-friendly. It has a break-even in the low $40s. It's using its excess cash to pay down debt from $16 billion to $13 billion. Once it gets to $13 billion, 100% of free cash flow will be returned to shareholders.
Philip Blancato, chief market strategist, Osaic
The street's consensus view is that oil will fall to $82 to $85 a barrel after some sort of agreement [with Iran]. The demand structure right now is quite high, in part because we're going into the summer cooling season. There's a seasonality aspect to this that I'm surprised hasn't been spoken more about. Summer driving season is coming. Europe is already having a record heat wave right now. The demand for energy, I think, is going to push significantly higher.
The way to play it? The demand story is clearly around the liquefied natural gas producers, and more importantly the MLP [master limited partnership] space, which continues to look quite interesting. As far as producers I like that have deep oil reserves, I think right now that's fairly obvious. [Editor's note: Exxon Mobil and Chevron are two U.S. companies with large reserves.] So, I think you've got to use the demand side of the story to your advantage.
But we're actively adding energy through commodity exposure. For the first time in maybe a decade, you can get really successful returns in your portfolio by specifically adding a commodity exposure. Because it isn't just an oil story. It's the oil derivatives, it's natural gas, but more importantly, it's all the materials, from copper to lithium and everything in between. To me, a better way to add real alpha without a lot of beta is a commodity play, and one that doesn't have a high concentration of oil.
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June 05, 2026 03:30 ET (07:30 GMT)
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