Energy can be a tough area to invest in, with volatile commodity prices from one month to the next and energy usage changing around the world. Even formerly safe utilities aren't safe anymore after California utility PG&E went bankrupt

To navigate the industry, three Motley Fool contributors got their heads together to lay out why NextEra Energy (NYSE:NEE), Vivint Solar (NYSE:VSLR), and Ensco (NYSE:VAL) are three top energy stocks to buy. They're very different companies on the surface, but the theme among all three is value in their respective industries. 

Check out the latest NextEra Energy, Vivint Solar, and Ensco earnings call transcripts.

Solar and wind farm in a hilly region.

Image source: Getty Images.

A consistent outperformer

Matt DiLallo (NextEra Energy): Leading utility NextEra Energy recently put the finishing touches on another strong year. Thanks to its continued investments in clean energy, the company was able to grow its adjusted earnings by 15% while boosting its dividend by 13%. Those two factors helped it deliver a total return of more than 14% last year, beating both the market and its peer group by a wide margin. That continued the company's stretch of outperforming the market, which it has done for the past decade.

NextEra Energy is working hard to continue generating strong results for its investors over the coming years. That's why the company is investing $40 billion through 2020 to expand its portfolio of clean energy assets, which it believes should grow earnings by a 6% to 8% annual pace through at least 2021. In addition, it expects to see an added boost from some recent acquisitions hit the bottom line during 2020 and 2021. This earnings growth should enable the company to increase its dividend at a 12% to 14% annual rate through at least 2020.

That fast-rising payout is worth noting since dividend growth stocks have historically outperformed all others, which has certainly been the case for NextEra Energy over the years. Given its past success and bright outlook, I think NextEra stands a good chance of continuing its market-beating ways in the future, which is what makes it an excellent energy stock to buy this month. 

Solar energy's value play

Travis Hoium (Vivint Solar): The solar industry has been in a downward trend for most of the past two years, hurt partly by a hostile White House administration that's loosening regulations for fossil fuels and solar tariffs that were implemented a year ago. But as 2019 begins, there are some positive signs for solar energy, and Vivint Solar is well positioned to be a big winner for investors. 

In 2017, residential solar installations fell 17% to 2.2 GW and the market is expected to contract slightly in 2018. But installations have stabilized in the last two quarters and analysts at GTM Research and SEIA expect the residential solar market to grow 10% or more from 2019 to 2021. 

Vivint Solar is already starting to see some of that growth, installing 40.4 MW in the first quarter of 2018, 47.0 MW in the second quarter, and 54.3 MW in the third quarter. The company is also ramping operations in nascent markets like Florida and Illinois, which should help growth in 2019. On top of improving operations, Vivint Solar has an estimated $8.11 per share in net retained value per share, which is solid value for a stock trading for $4.35 per share. 

As strong as Vivint Solar is in residential solar, it still hasn't reached its long-term potential. Energy storage and EV chargers haven't been fully rolled out to most solar systems, but they're a logical extension to add to the sales process. That will make residential solar even more valuable and Vivint Solar is in a leading position to take advantage of this growing market. 

Offshore drilling rig on water.

Image source: Getty Images.

A rising tide

Jason Hall (Ensco): Offshore drillers continue to take a beating, as this segment of the oil and gas industry has been one of the slowest to recover from the oil downturn.

And while offshore still has a ways to go, I think investors should do well to buy Ensco at current prices. At recent prices, its shares trade for about 24% of tangible book value. Furthermore, it's also a 23% discount to the book value of Rowan Companies (NYSE:RDC), which will merge with Ensco sometime in the first half of the year. It's a substantial discount to more typical book value multiples these companies have carried during healthy offshore drilling environments:

ESV Price to Tangible Book Value Chart

ESV price to tangible book value. Data by YCharts.

It's also a solid 20% discount to Rowan's share price, based on the terms of the merger, which calls for Rowan shareholders to receive 2.215 Ensco shares for each Rowan share they own pre-merger. 

And while that discount to the deal value could result in some short-term upside for Ensco shares (or downside risk for Rowan's), the bigger opportunity is in the combined company. Rowan's fleet includes a number of high-spec jack-ups, and Ensco has a world-class floater fleet, making the combination one of the world's newest and largest. 

The combined business will also have over $1.6 billion in cash and minimal near-debt maturities in the next few years, as well as more than $2.7 billion in contracted backlog. At recent prices, Ensco is set up to deliver solid gains for patient investors willing to ride out the ongoing offshore recovery. 

Investing in a changing energy landscape

If there's a theme you can see among all of these picks, it's value from existing operations and growth opportunities ahead. Given the volatile energy landscape, starting with a value stock is a great move, and if growth opportunities take off, investors could have a big winner on their hands.