Crude oil prices rebounded last year, with the U.S. benchmark price, WTI, rallying nearly 35%. That recovery, however, didn't fuel similar gains in energy stocks. The iShares U.S. Oil & Gas Exploration & Production ETF, an exchange-traded fund that holds more than 50 U.S.-focused oil stocks, only gained about 8% last year.

Because of that, several oil stocks look compelling these days. Three that stand out as top buys right now are upstream oil and gas producer Diamondback Energy (NASDAQ:FANG)master limited partnership (MLP) Plains All American Pipeline (NYSE:PAA), and refiner Marathon Petroleum (NYSE:MPC).

An oil pump with a dramatic sunset in the background.

Image source: Getty Images.

On tap for a cash flow gusher

Diamondback Energy has spent the past several years building out a leading position in the oil-rich Permian Basin. That increasing scale in the low-cost oil play has reduced the oil price point that the company needs to fund its capital program and dividend. For 2020, Diamondback only needs oil to average about $45 a barrel to grow its production by more than 10% as well as pay its 0.8%-yielding dividend.

Because of that, it can produce a significant amount of free cash flow if oil is above that level. At $55 crude, Diamondback can generate about $675 million in excess cash. With the price currently closer to $60 a barrel, it's on track to produce even more free cash this year, which it will likely use to repurchase shares.  

That upcoming gusher of free cash flow has analysts fawning over the company, with nearly all who follow it rating shares a buy. In their view, the stock has substantial upside potential in the coming year, making it one of the top fracking stocks to buy these days.

A dirt-cheap income stream

Plains All American Pipeline delivered head-scratching performance last year. Units of this MLP, which focuses on oil pipelines, declined by about 8% even though it expected to grow its earnings by about 15%. Because of that, Plains All American trades at a ridiculously cheap valuation of less than eight times earnings.

While Plains All American doesn't expect to grow its earnings quite as fast this year due to the anticipation of weaker results in its volatile supply and logistics business, the rate should re-accelerate in 2021 when several pipeline expansions should come on line. Because of that, and its top-notch financial profile, Plains All American has plenty of fuel to continue growing its 7.8%-yielding distribution to investors. That high yield, when combined with the MLP's cheap valuation, sets it up to potentially produce strong total returns over the next few years. That's why it's one of the top pipeline stocks to buy right now.

A storage tank with the sun rising in the background.

Image source: Getty Images.

Catalysts abound at this refiner

Marathon Petroleum has underperformed its refining peers in recent years. That's causing investors to press the company to make changes. After initially resisting, Marathon has started to take their advice, which includes plans to spin off its Speedway gas station business by the end of this year. The company could also spin off its stake in MLP MPLX, which might then convert into a corporation. On top of that, the company plans to take action to boost the profitability of its legacy refining operations.

Marathon could get some outside assistance in expanding its refining margins from a recent change in the fuel standards for the shipping industry. The new rules will force ships to use low-sulfur fuels, which should drive demand for these higher-margin refined products. Marathon is among the best positioned to benefit from this change, given the types of refineries it operates.

With so many catalysts, Marathon Petroleum is one of the top energy stocks to buy this year.

Lots of upside potential with these oil stocks

Rising oil prices did little to fuel oil stocks last year, which is why several look like compelling buys right now. Leading the way are Diamondback Energy, Plains All American Pipeline, and Marathon Petroleum, which each sell for attractive valuations given what appears to be ahead in 2020.