Although the United States’ offer of a peace plan to Iran was a hopeful sign that the conflict in the Middle East was heading toward a resolution, Iran’s rejection of the plan, coupled with the ongoing military action, suggests that the end to the conflict is nowhere in sight. Given restricted shipments through the Strait of Hormuz, many industry experts believe the price of oil benchmark Brent crude could climb to between $150 and $200 per barrel, up from about $107 per barrel as of this writing.
With energy prices rising, two leading oil and gas stocks have also ripped higher. Let’s take a closer look at these oil patch giants to see whether they’re buys right now, even after their recent climbs.
Image source: Getty Images.
An oil supermajor dedicated to rewarding shareholders
Over the past month, the price of Brent crude has soared more than 44%, while shares of Chevron (CVX 0.24%) have risen more than 13%. Shares of Chevron are now trading at about 10.7 times operating cash flow, a premium to their five-year average cash-flow multiple of 8.3.
Chevron stock is drawing interest from investors for several reasons. Because the company operates robust upstream operations in North America and other regions unaffected by the closure of the Strait of Hormuz, investors recognize the advantageous position in which the company finds itself.
Today’s Change
(-0.24%) $-0.50
Current Price
$210.65
Key Data Points
Market Cap
$420B
Day’s Range
$210.32 – $214.71
52wk Range
$132.04 – $214.71
Volume
501K
Avg Vol
13M
Gross Margin
14.66%
Dividend Yield
3.28%
Operating in Venezuela for over a century, Chevron believes it has the potential to grow production volumes in the country up to 50% over the next two years. Pair this with the company’s strong operations in the Gulf of America, the Permian Basin, and the Guyana and Bakken Shale assets (among others) acquired from Hess, and it’s clear that Chevron is well positioned for sustained growth.
And this is just from its upstream operations. With its midstream operations — recently buttressed by its acquisition of Hess — and its extensive downstream operations, the company can mitigate the risk of challenges in any one link of the energy value chain.
The buy case for Chevron stock is further seen in its commitment to returning capital to shareholders. For 39 consecutive years, Chevron has hiked its dividend, which now offers a 3.5% forward yield.
Even after its recent rise, this midstream maven’s stock is sitting in the bargain bin
Yet another energy stock that is shining brightly on energy investors’ radars is midstream specialist Oneok (OKE 1.06%). Over the past month, shares of the pipeline stock are up 13.7%, while the S&P 500 has drifted 6.8% lower.
Today’s Change
(-1.06%) $-1.00
Current Price
$92.96
Key Data Points
Market Cap
$59B
Day’s Range
$92.50 – $95.20
52wk Range
$64.02 – $100.56
Volume
270
Avg Vol
5M
Gross Margin
18.31%
Dividend Yield
4.48%
From gathering to processing, fractionation, transportation, storage, and marine export services, Oneok operates a variety of midstream assets that help it to transport natural gas, crude oil, and other products through its 60,000 miles of pipeline. Although the company relies more heavily on its natural gas business, the diversity of products that it transports helps mitigate the risk of a downturn in a single commodity. Evidence of the company’s successful business model is seen in its 12 consecutive years of growth in earnings before interest, taxes, depreciation, and amortization (EBITDA).
In 2026, for example, Oneok projects natural gas liquids and natural gas gathering and processing will represent 35% and 27%, respectively, of net income, while refined products and crude will represent 28% of net income.
Like many midstream companies, Oneok’s business model is largely fee-based. In fact, from 2021 through 2025, Oneok’s average annual earnings were more than 90% fee-based, and the company projects the same for 2026.
Oneok stock currently offers a 4.5% forward dividend yield, and management is targeting annual dividend growth of 3% to 4% over the coming years.
Drilling down to determine if Chevron and Oneok are smart buys right now
While shares of both Chevron and Oneok have rocketed higher over the past few weeks, their performances shouldn’t dissuade investors from considering them. Chevron’s resilient business model and strong upstream portfolio bode well for its future and the sustainability of its dividend. Oneok stock, on the other hand, looks attractive now between its dividend and valuation. Shares are trading at 9.8 times operating cash flow, a reasonable valuation considering the company’s five-year average cash-flow multiple is 9.7.