The energy sector has lagged the S&P 500 in the past year, but the International Energy Agency anticipates oil demand growth will accelerate in 2025. In addition, investors anticipate that President Donald Trump and his administration will support the energy sector with favorable policies. Stocks that are highly correlated to oil prices could generate big profits in 2025 and beyond.
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However, high correlation to crude can be a double-edged sword, as many energy investors experienced when crude prices collapsed in 2020. Here are the seven Bank of America buy-rated stocks with the highest correlation to WTI crude oil prices:
Stock | Implied upside from Jan. 29 close |
Targa Resources Corp. (ticker: TRGP) | 1.5% |
Schlumberger Ltd. (SLB) | 9.9% |
Halliburton Co. (HAL) | 21.4% |
Conoco Phillips (COP) | 35.9% |
Baker Hughes Co. (BKR) | 11.4% |
Chevron Corp. (CVX) | 15.6% |
Freeport-McMoRan Inc. (FCX) | 84.7% |
Targa Resources Corp. (TRGP)
Targa Resources is a U.S. midstream logistics company that specializes in onshore natural gas and natural gas liquids, or NGLs. Targa shares have gained more than 130% in the past year, fueled by the completion of several organic expansion projects, as well as record production volumes and earnings. Analyst Jean Ann Salisbury says Targa’s integrated NGLs business and its high exposure to the Permian Basin gives the company a major opportunity to capitalize on Permian production growth in coming years. Bank of America has a “buy” rating and $206 price target for TRGP stock, which closed at $202.86 on Jan. 29.
Schlumberger Ltd. (SLB)
Schlumberger, now doing business under the name SLB, is one of the world’s leading oilfield services companies. Unfortunately, the stock has lagged many of its energy sector peers in the past year, and concerns over the company’s operations in Russia may be weighing on investor sentiment. However, Analyst Saurabh Pant says SLB holds a leadership position in digital services, its international business is strong, and it is increasingly focusing on an asset-light portfolio. Pant says SLB has a strong balance sheet and an attractive valuation, especially in light of the stock’s recent weakness. Bank of America has a “buy” rating and $45 price target for SLB stock, which closed at $40.94 on Jan. 29.
Halliburton Co. (HAL)
Halliburton is a leading U.S. oilfield services company. Pant says Halliburton is attractively valued and generates impressive cash flow. He says Halliburton is the leading North American oilfield services provider, but investors may not fully appreciate its international business. Pant says Halliburton’s shale franchise will be a long-term winner in the U.S. market. Halliburton also aggressively cut costs during the last oil downturn, setting the company up for higher margins moving forward. Pant says efficiency improvements and digital penetration should improve profitability as well. Bank of America has a “buy” rating and $32 price target for HAL stock, which closed at $26.37 on Jan. 29.
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Conoco Phillips (COP)
ConocoPhillips is one of the world’s largest independent oil and gas exploration and production companies. Analyst Kalei Akamine says ConocoPhillips has an industry-leading growth outlook, and that production growth will compound into cash flow gains as well. Akamine says ConocoPhillips management prioritizes financial transparency. The company also recently expanded its share buyback plan by $20 billion, and Akamine estimates ConocoPhillips can potentially retire all the shares it issued in its Marathon Oil acquisition within three years. The company estimates Marathon deal synergies will exceed $500 million. Bank of America has a “buy” rating and $138 price target for COP stock, which closed at $101.56 on Jan. 29.
Baker Hughes Co. (BKR)
Baker Hughes is a U.S. oilfield services company that provides equipment and technology for the energy sector. The company is known as the global leader in liquefied natural gas (LNG) liquefaction. Plant recently met with Baker Hughes management, and he says the company has diverse and growing demand sources in Industrial and Energy Technology (IET). He projects IET will grow to 54% of Baker Hughes’ earnings before interest, taxes, depreciation and amortization (EBITDA) by 2030. Baker Hughes also has a generous capital return program. Bank of America has a “buy” rating and $48 price target for BKR stock, which closed at $43.07 on Jan. 29.
Chevron Corp. (CVX)
Chevron is a global oil major that operates exploration and production, petrochemical and refining and marketing businesses. Chevron shares have a 4.2% dividend yield, the highest on this list. Chevron is Salisbury’s top energy sector stock pick for 2025. She says Chevron has several exciting catalysts ahead, including the launch of multiple new projects in the Gulf of Mexico and the completion of TengizChevroil projects in Kazakhstan. The stock could also get a major boost if Chevron can gain regulatory approval for its Hess acquisition. Bank of America has a “buy” rating and $180 price target for CVX stock, which closed at $155.69 on Jan. 29.
Freeport-McMoRan Inc. (FCX)
Freeport-McMoRan is the world’s largest publicly traded copper producer, and it’s also a major producer of gold and molybdenum. Analyst Lawson Winder has a bullish outlook for copper prices, which should boost Freeport’s bottom line. Winder projects the company will generate an impressive $4.3 billion in free cash flow in 2025, up from just $2.8 billion in 2024. As for gold, the price of the precious metal is still hitting new all-time highs above $2,800 an ounce in early 2025, which is also good news for FCX shareholders. Bank of America has a “buy” rating and $67 price target for FCX stock, which closed at $36.28 on Jan. 29.
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7 Oil Stocks to Buy Closely Tied to Crude Prices originally appeared on usnews.com
Update 01/30/25: This story was published at an earlier date and has been updated with new information.