Energy is the lifeblood of the global economy, powering transportation, industry, homes, and manufacturing. Today, energy demand is soaring, driven by the rapid expansion of data centers that power artificial intelligence (AI) algorithms.
Bank of America Institute projects U.S. electricity demand will grow 2.5% annually in the coming years -- a rate that is 5 times faster than the previous decade. This ever-increasing demand for power underscores the importance of energy infrastructure and security, and companies serving these markets stand to benefit.
As the U.S. strives for greater energy independence and a more resilient power grid, a diverse mix of energy sources is crucial. If you're looking to capitalize on this trend, here are three no-brainer energy stocks to invest in before the year is over.
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A top natural gas producer in the U.S.
EQT Corporation (EQT 2.19%) is a top company in the United States' growing natural gas industry. The company is involved in the exploration and production of natural gas, as well as the transportation and sale of natural gas to utilities, power plants, and other industrial buyers.
NYSE: EQT
Key Data Points
Natural gas stands out as a cleaner-burning fuel that produces less carbon dioxide and fewer pollutants. Not only that, but unlike intermittent solar or wind energy, natural gas provides reliable baseload electricity that is available as needed.
Natural gas is the largest source of energy in the U.S. and is a major fuel powering the industrial sector. Additionally, utilities and industrial customers are increasingly turning to natural gas because it is cost-effective and can be integrated quickly using turbines or quickly deployable fuel-cell technology.
Another benefit is that the U.S. is the world's largest liquefied natural gas (LNG) exporter, shipping 11.9 billion cubic feet per day in 2024. As demand for clean-burning fuels grows, EQT is in an excellent position to benefit.
Tight energy markets should benefit this power operator
Vistra Energy (VST 0.50%) is one of the largest power producers in the U.S. and provides electricity to over 5 million residential, commercial, and industrial customers. Its advantage lies in its role as a merchant power company, selling electricity directly into wholesale competitive markets across 18 states and Washington, D.C., on a short-term basis rather than through power purchase agreements.
NYSE: VST
Key Data Points
Unlike traditional regulated utilities, merchant power companies do not have guaranteed revenue or a set rate of return on their assets. This business model positions Vistra to profit from rising wholesale prices, particularly in regions such as the Northeast and Midwest U.S., where surging demand and supply constraints are driving prices higher.
The PJM region (which covers 13 states and the District of Columbia) is experiencing a capacity crunch due to soaring demand (primarily from data centers) and insufficient new supply, resulting in tightness and an upward bias in wholesale power costs.
As supply and demand conditions remain tight, Vistra's merchant power platform stands to benefit.
An integrated oil and gas giant
ExxonMobil (XOM 0.33%) operates as one of the world's largest energy companies, with investments in Guyana, the Permian Basin, and key LNG terminals and transportation pipelines. While many may associate it with oil production, ExxonMobil is also a major natural gas producer in the United States.
NYSE: XOM
Key Data Points
Exxon's business spans the entire value chain, which is why it is referred to as an integrated oil and gas company. This includes drilling for oil and gas, extracting materials, transporting them, and refining them into finished products such as gasoline, plastics, and lubricants.
Rather than focusing on gas production, the company aims to be a top seller of high-value LNG, which it sees as a critical component of its long-term growth. The company has several LNG projects underway, aiming to grow LNG sales to 40 million metric tons per annum (MTPA) by 2030, effectively doubling its LNG business.
ExxonMobil has a massive asset base across the energy sector, which provides it with durable cash flow across market cycles. With its growing LNG business and tailwinds from energy demand, Exxon is another solid energy stock to buy before the year is over.
