Energy stocks have been blistering hot. The average one in the S&P 500 has rocketed 45% this year. That has vastly outperformed the broader index's 13% return. Fueling the rally in energy stocks has been a rebound in demand as the global economy reopens following government-mandated shutdowns to slow the pandemic's spread in the past year. 

While most energy stocks are much higher than they were to start the year, some still look like they have room to run. Three red-hot energy stocks that our contributors believe have ample upside left are Chevron (CVX -0.20%), Crestwood Equity Partners (CEQP), and ConocoPhillips (COP -0.82%). Here's why.

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Staying focused and strong

Reuben Gregg Brewer (Chevron): Chevron's stock has roughly doubled since hitting a low point in early 2020. The downturn in the shares was driven by falling oil prices, thanks to a demand drop during the coronavirus pandemic. The stock's rebound was driven by rising oil prices as demand picked up again and excess inventories were worked off. The question is what happens from here.  

Clean energy advocates would suggest that oil is falling out of favor as a fuel source. That's true, and it's why companies like BP and Shell have started to shift their businesses toward cleaner alternatives. However, energy transitions take a long time to play out -- it took oil 100 years to unseat coal as the world's dominant fuel. It is highly unlikely that oil is going to disappear for some time, which is why Chevron is, for the most part, sticking to its knitting. (It is investing in cleaner options, but really only on the edges of its portfolio.)

CVX Dividend Per Share (Quarterly) Chart

CVX Dividend Per Share (Quarterly) data by YCharts

What makes Chevron so interesting is its financial strength, as it has among the cleanest balance sheets in the energy patch. Notably, it used that strength to opportunistically acquire Noble Energy in 2020. That should help it emerge from the downturn an even stronger company than when it entered it. In fact it recently announced a dividend increase, extending its over three-decade-long annual streak by yet another year, which is a testament to this Dividend Aristocrat's strength and shareholder focus. If you are looking for an oil stock, even conservative investors will find a lot of things to like here.  

Still cheap after a blistering run

Matt DiLallo (Crestwood Equity Partners): Units of master limited partnership Crestwood Equity Partners have rocketed nearly 70% already this year. However, the pipeline and processing company still has plenty of room to run, given its relatively inexpensive valuation.

Crestwood currently expects to produce between $575 million and $625 million of adjusted EBITDA this year. Given its current $5.5 billion enterprise value (EV), it trades at an EV/EBITDA ratio of 8.8 to 9.6 times. To put that into perspective, the company recently agreed to sell its 50% stake in a pipeline joint venture to Kinder Morgan (KMI -0.27%) at a 10 times EBITDA multiple. That suggests it's still selling for a relatively cheap price. 

Because of that, the MLP plans to use its growing free cash flow to repurchase additional equity. That has the potential to provide a further boost to shareholder value since it can provide a meaningful increase in cash flow per unit. For example, Crestwood repurchased $268 million of equity from a former financial investor earlier this year. That boosted its cash flow per unit by 15%. It's aiming to buy back another $175 million in equity in the future, which could provide another meaningful lift on a per-share basis. 

Meanwhile, Crestwood's high-yielding dividend adds to its appeal. With a payout near 8% even after this year's rally, the MLP offers investors the potential for high total returns. Add it all up, and Crestwood still looks like an attractive investment opportunity.

The market could be underappreciating this oil stock's potential

Neha Chamaria (ConocoPhillips): ConocoPhillips shares may have gained 50% year to date, but the stock could still have a long way to go. Having recently acquired Concho Resources, ConocoPhillips sees 2021 as its "catalyst moment" to improve business prospects and put the company on the next growth track. The Concho acquisition, of course, should be a big growth driver as it starts contributing significantly to ConocoPhillips' cash flows.

ConocoPhillips trimmed down its portfolio substantially in recent years, which makes its Concho acquisition even more notable. The company now owns a resource base of more than 23 billion barrels of oil equivalent (BBOE) at an average cost of supply as low as below $30 per BOE. Oil price above its cost of supply should typically generate greater after-tax returns for the company.

As cash flows rise, so should shareholder returns for two reasons: lower debt and higher dividends or share repurchases. ConocoPhillips already has a target to reduce debt by $5 billion over the next five years and return 30% of its cash from operations (CFO) to shareholders. In fact, the company returned a cumulative 43% of CFO in the past five years, so returns to shareholders could be much higher than 30% in coming years as well. For now, ConocoPhillips is already contemplating selling stake in Cenovus Energy and using the proceeds to repurchase shares. As of January, ConocoPhillips held 10% stake in Cenovus.

Given its cash-flow growth potential and management's accelerated share repurchases which reflects its confidence in the company's prospects, the 2.9%-yielding ConocoPhillips stock could be a red-hot winner in the long run.