As we covered tech the last two weeks, let’s take a look inside the energy sector. Wall Street consensus has turned heavily favored on the Energy sector heading into the final stretch of 2026. Leading institutions like Charles Schwab rank Energy among their most preferred sectors. We have Energy ranked fourth in price growth potential and other key categories according to our sector report.
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Given the valuation environment, we searched for energy stocks rated 5 (Strong Buy) that were also in our top half of most undervalued stocks according to our proprietary valuation model. We screened out stocks with less than $1 billion in market capitalization and were left with 7 stocks.
- Transportadora de Gas del Sur S.A. (TGS) is a major Argentine energy company engaged in the transportation of natural gas and the production and commercialization of natural gas liquids . It operates the largest pipeline system in Latin America. Founded in 1992, its headquarters in Buenos Aires, Argentina.
- Vista Energy (VIST) is an independent oil and gas exploration and production company primarily focused on developing shale oil and shale gas assets in Latin America. The company holds a massive operational presence in Argentina’s prolific Vaca Muerta shale play, supplying crude oil, natural gas, and liquefied petroleum gas (LPG). VIST was founded in 2017 with HQ in Mexico City, Mexico.
- Marathon Petroleum Corporation (MPC) is a leading independent downstream energy company that operates the largest crude oil refining system in the United States. The corporation manages 13 refineries across the nation, distributes fuel through a vast marketing network, and owns a majority stake in midstream logistics provider MPLX LP. It was founded in 1987 with HQ in Findlay, OH.
- Phillips 66 (PSX) is a multinational energy manufacturing and logistics company engaged in oil refining, midstream transportation, marketing, and petrochemical manufacturing. Spun off from ConocoPhillips, the company serves global markets with fuel products and lubricants while advancing renewable fuels and a chemical joint venture via Chevron Phillips Chemical. It was founded in 1927 in Bartlesville, OK which is still its headquarters.
- Subsea 7 S.A. (SUBCY) is a global engineering, procurement, installation, and commissioning contractor servicing the offshore energy industry. The firm specializes in executing complex subsea field developments, pipeline installations, offshore wind infrastructure builds, and marine heavy lifting operations. Its current HQ is in London, UK, after being founded in Luxembourg in 1993.
- Enerflex Ltd. (EFXT) is a global supplier of modular natural gas handling, processing, and contract compression solutions. The Calgary, Canada company designs, fabricates, rents, and services systems for gas transmission, water treatment, carbon capture, and electric power generation. EFXT was founded in 1980.
Here is the table showing key data for these companies.
| Ticker | Company Name | VE Rating | 10/09 Close | Fair Value | Valuation Rank (Mis-pricing) | Forward P/E Ratio | One Year Forecast | Div. Yield |
| TGS | TRANSPORTADORA | 5 | 27.04 | 32.88 | 80 | 11.2 | 14.1% | 3.4% |
| VIST | VISTA ENGRY SAB | 5 | 66.06 | 75.16 | 75 | 4.4 | 15.5% | 0.0% |
| MPC | MARATHON PETROL | 5 | 432.36 | 486.14 | 74 | 6.6 | 21.4% | 0.9% |
| PSX | PHILLIPS 66 | 5 | 269.79 | 278.06 | 65 | 9.1 | 17.4% | 1.9% |
| SUBCY | SUBSEA 7 SA | 5 | 33.53 | 33.10 | 59 | 12.5 | 14.5% | 8.1% |
| YPF | YPF SA D CV ADR | 5 | 51.16 | 50.15 | 58 | 6.6 | 22.5% | 0.3% |
| EFXT | ENERFLEX LTD | 5 | 24.37 | 23.47 | 55 | 11.4 | 24.7% | 0.5% |
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We find it remarkable how low the forward P/E multiples are on these seven companies in this high valuation environment. Some investors may incur additional taxes on foreign dividends. Be advised of that if considering TGS and/or SUBCY on the basis of dividend yield. The two American companies, Marathon (MPC) and Phillips (PSX)are not subjected to any such taxes. We also urge investors to consider simply investing in XLE despite its recent fall from 4 to the highest 3-rated select sector ETF. We mention it because its dividend yield is higher than all but the least liquid of this group, while its standard deviation is much lower.
Overall, it appears that this cycle of energy stock performance dominance is not about to end soon. Moreover, its valuations are much less than those of the tech sector.
Herb Blank
Senior Quantitative Analyst, ValuEngine.com
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