Energy stocks are unloved by most market participants. They operate in a cyclical industry, are considered dirty by many ESG (environmental, social, and governance) investors, and are generally less exciting than the hottest artificial intelligence (AI) or consumer stocks.
That doesn’t mean they make a bad investment in your portfolio. When oil prices soar, it usually signals a disruption to the global economy, which can negatively affect most stock prices. For energy producers, rising oil prices are a great thing, making them a nice natural hedge for your portfolio.
But which energy stocks should you buy to round out your portfolio? Here are two leading energy stocks — both owned by Berkshire Hathaway — that are no-brainer buys for your portfolio right now.
Occidental Petroleum
Today’s Change
(2.11%) $1.12
Current Price
$54.20
Key Data Points
Market Cap
$53B
Day’s Range
$53.33 – $56.48
52wk Range
$34.78 – $56.48
Volume
1.4M
Avg Vol
12M
Gross Margin
31.94%
Dividend Yield
1.77%
A leading oil producer expanding globally
A name well known in the energy space is Chevron (CVX +1.54%). The giant oil producer keeps getting larger and larger, including a recent acquisition of the company Hess, which has a nice asset in Guyana. It is making global explorations in places like Libya, Greece, and the United States, with a capital expenditures budget of $18 billion to $19 billion for 2026.
The return on all this capital spending comes from the 4 million barrels of oil (or equivalent) the company is now producing every day for customers. That makes up around 4% of global oil production. If the price of oil — along with natural gas — begins to rise, then Chevron’s earnings will rise along with it.
Right now, oil prices are back down to $65 after peaking at over $100 during the initial Russian invasion of Ukraine in 2022. Chevron is still generating $12.5 billion in net income a year, well below the $30 billion it earned at the peak in 2022. Predicting where oil prices will go is difficult, but the company is well positioned to treat shareholders well if prices rise again. It also has a dividend yielding 3.75%.
Image source: Getty Images.
Natural gas giant
Another player in the gas space, one that Berkshire Hathaway owns over 25% of, is Occidental Petroleum (OXY +2.11%). It is one of the dominant producers of natural gas in the Permian Basin in the United States.
Natural gas is a much-needed resource for the AI data center revolution, which will greatly increase electricity demand in the next few years. The quickest way to get this electricity is to increase natural gas production from places like Occidental Petroleum.
The company is a smaller producer than Chevron, producing less than 1.5 million barrels of oil equivalent per day. Natural gas prices have begun to fall, which could hurt Occidental’s earnings power in the short term. However, over the next few years, we will see massive increases in electricity demand from data centers, which could drive these prices up.
Occidental generated just $2.5 billion in net income over the last 12 months, which is well off the over $10 billion in earnings it was generating at its peak. If natural gas prices spike again, this will make a nice ballast to your portfolio. There is a reason Berkshire Hathaway owns a lot of the stock.