10 of the Best Energy Stocks to Buy for 2019

These are 2019’s best energy stocks.

Good news for contrarian investors: if you’re seeking to bet on “reversion to the mean,” one sector looks particularly primed to outperform in 2019. The 10 best energy stocks to buy for 2019 are chock-full of value, heavy dividends and growth names. Ironically, one of the bearish catalysts for oil prices has been booming production in the U.S., which is primed to become a net energy exporter by 2023. But America’s blossoming is a great thing for many of the companies on this list, and OPEC’s decision in December to cut production should also help revive the sector.

Phillips 66 Partners LP (ticker: PSXP)

As a master limited partnership, Phillips 66 Partners is a unique type of investment, similar to a real estate investment trust. By passing through all extra cash flows to investors, MLPs are allowed to avoid corporate taxes, giving the company a cost advantage over competitors and allowing it to pay large dividends. Yielding 6.9 percent, PSXP is a midstream oil and gas company, meaning it helps transport, store and process fossil fuels before they’re sold to the consumer. Although recently hit by the oil sell-off, PSXP’s pipelines — which it collects tolls from regardless of oil prices — make it one of the best energy stocks to buy for 2019.

MPLX LP (MPLX)

Midstream energy infrastructure company MPLX is another master limited partnership with two distinct lines of business: logistics and storage, and natural gas gathering and processing. The latter is where the growth comes from, and MPLX is expanding operations to some of North America’s most famous reservoirs: the Marcellus Formation, the Permian Basin and the South Central Oklahoma Oil Province. A price-earnings-growth ratio of just 0.5 — anything below 1 shows attractive value — as well as a 7.5 percent dividend in today’s low-rate environment makes MPLX one of the best energy stocks to buy for 2019.

Occidental Petroleum (OXY)

Named by U.S. News as one of the best dividend stocks to buy, Occidental naturally makes the list of 2019’s best energy stocks. Unlike some of the midstream players mentioned earlier on this list, OXY is a more archetypal energy stock: it’s a Houston-based oil and gas explorer and producer. Founded in 1920, Occidental’s success isn’t accidental: the company takes every precaution to protect itself from downturns, recently completing a plan to reduce break-even cost per barrel to $40, giving it flexibility envied by many competitors. A 4.7 percent dividend and price-earnings ratio of 13 make this $51 billion energy powerhouse a relatively safe bet.

Exxon Mobil Corp. (XOM)

Exxon is a must-own for conservative income investors who want to insulate themselves somewhat from the volatile ups and downs of global oil and natural gas markets. At more than $330 billion, Exxon is the largest basic materials company on earth, and its ownership of both upstream and downstream operations gives it both total vertical integration and a hedge for when oil prices decline. As prices fall, downstream margins (from refining, distribution and marketing) go up. Consumers experience this every time oil plunges but gas prices barely budge. While Exxon looks to the Permian Basin for some future growth, a 4.2 percent dividend should keep long-term investors around.

Renewable Energy Group (REGI)

Shares of Renewable Energy Group went on a rip-roaring rally in 2018, with REGI more than doubling as energy stocks struggled. Though a modest $1 billion company, REGI is North America’s largest producer of biomass-based diesel, which is far better for the environment. REGI turned profitable without a federal tax credit for the first time in 2018, although odds are high that in 2019 the large credit will still be retroactively granted. REGI’s niche provides a major competitive advantage as renewable fuel mandates in California, Texas, and Illinois drive demand. Trading at an absurd 3 times earnings, REGI is easily one of the best energy stocks to buy for 2019.

Pattern Energy Group (PEGI)

Pattern Energy Group is not your typical energy stock. It’s essentially a power company specializing in the generation of renewable energy via wind and solar projects. Through a torrid pace of acquisitions, PEGI doubled its revenue between 2013 and 2017. Moderating its appetite over the last year, selling assets, cutting costs and paying off debt has made PEGI more sustainable as it works toward bringing the payout ratio on its 8 percent dividend to under 80 percent in the long term. Though it requires a bit of faith, if PEGI can reduce debt in coming quarters, the $2 billion renewable power company should be a great stock to buy for 2019.

Marathon Petroleum (MPC)

Like many of the 10 best energy stocks to buy for 2019, $43 billion oil refiner Marathon Petroleum looks dramatically undervalued and unloved by the market. Trading at 12 times earnings, 8 times forward earnings and a low PEG ratio of 0.3, Wall Street appears to have little faith in MPC’s future execution. But new global fuel standards set to go into effect in January 2020 require lower-sulfur fuel, and are expected to dramatically increase demand for diesel fuel. As the U.S.’s largest refiner, with coastal locations on the Gulf and the West Coast, Marathon is well-positioned to benefit from booming demand — not just domestically, but abroad.

NRG Energy (NRG)

OK, so NRG may technically fall under the utilities sector, but the commodity it sells is energy after all, and that means it must be harvested from all kinds of sources: fossil fuels, wind, solar, nuclear — you name it. A combination of 2018’s lackluster energy sector and revenue that’s expected to modestly decline going forward have NRG selling for just 9 times forward earnings, even after over 40-plus percent gains in the last 12 months. Given NRG’s momentum, and with earnings per share expected to grow by 50 percent in 2019, this Princeton, New Jersey, business goes down as one of 2019’s top energy stocks to buy.

Legacy Reserves Inc. (LGCY)

LGCY, which transitioned from an MLP to a C corporation in 2018 to restructure, reduce debt and increase access to capital, is the penultimate name on this list of energy stocks. MLPs are required to pass through all earnings to shareholders, but after oil prices cratered in 2014, LGCY didn’t have much to pass through. What it did have, however, were a lot of high-quality wells. Accelerated production plans in the Permian Basin and East Texas, where LGCY owns shallow-decline oil and natural gas wells, drove a 31 percent increase in production in the third quarter. The highly levered, $196 million Legacy Reserves is only a buy for aggressive energy market bulls.

Enable Midstream Partners (ENBL)

The last of the best energy stocks to buy for 2019 is Enable Midstream Partners, an Oklahoma City-based MLP engaged in the gathering, processing, transportation and storage of oil and natural gas. ENBL services some of the largest basins and shale formations in the U.S., including the Andarko Basin, Ark-La-Tex basin, and the Bakken Shale formation. More than 50 percent of shares are held by insiders, fully aligning shareholder interests with those running the company. A 9.4 percent dividend, P/E ratio under 15 and price-book ratio of 0.8 make ENBL a great play for anyone who believes energy prices are at or near another bottom.

The best energy stocks to buy for 2019.

To review, these are the best energy stocks to buy for 2019:

— Phillips 66 Partners LP (ticker: PSXP)

— MPLX LP (MPLX)

— Occidental Petroleum (OXY)

— Exxon Mobil Corp. (XOM)

— Renewable Energy Group (REGI)

— Pattern Energy Group (PEGI)

— Marathon Petroleum (MPC)

— NRG Energy (NRG)

— Legacy Reserves Inc. (LGCY)

— Enable Midstream Partners (ENBL)