Goldman Sachs says to load up on these 22 energy stocks set to soar as the market recovers — and details 10 to ditch

  • After suffering devastating losses this year, fossil-fuel stocks and oil prices surged on news of Pfizer's successful vaccine results, which investors expect to drive fuel demand.
  • In a new report, Goldman Sachs analysts say energy companies leveraged to rising oil prices and demand are likely to continue gaining value. 
  • Meanwhile, clean-energy companies have been soaring for months — another trend set to continue as the price of clean-tech falls and new policies provide tailwinds. 
  • Goldman Sachs details 32 energy companies to buy and sell. We provide the full list here. 
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Energy stocks surged this week after Pfizer announced successful results for its coronavirus vaccine, which sent the price of oil — determined largely by demand for gasoline and jet fuel — soaring. 

This trend is likely to continue, according to analysts at Goldman Sachs. 

In a report Tuesday, the bank said companies tethered to rising oil prices and fuel demand are likely to gain value, with a successful vaccine "a key catalyst" for jet-fuel demand in the second half of next year.

A dip in shale-oil production in the US, as well as a potential stimulus package under a Biden presidency, would also be good for oil prices, the bank added. 

The coronavirus pandemic has dealt a devastating blow to the fossil-fuel industry by causing demand for its products to collapse. Though oil stocks jumped Monday and Tuesday, the Dow Jones US oil and gas index is still down about 43% from the start of the year, while oil prices are down about a third. 

Every major oil company has been forced to cut costs as a result. 

Read more: Layoffs, bankruptcies, and mergers: We're tracking how 21 energy giants from Shell to Exxon are responding to the historic oil price downturn

Renewable-energy companies have moved in the opposite direction.

Since the start of the year, the Nasdaq Clean Edge Green Energy Index, which tracks clean-energy companies, is up almost 120%, and it has plenty of room for growth, Goldman said. 

"We believe clean energy stocks – in particular solar equities – are poised to continue to outperform as fundamental trends such as technology costs, demand growth and financing/cost of capital continue to show faster-than-expected signs of improvement and resilience, despite the ongoing impacts of the COVID pandemic," Brian Lee, an analyst at Goldman Sachs, wrote in the report.

New policies that support clean energy are also likely in a Biden administration, Lee said. 

Within these broader themes, Goldman Sachs laid out 22 energy stocks that are set to ride an economic recovery — and 10 "that appear overbought on the vaccine news." 

A Halliburton storage silo near Brighton, ColoradoRJ Sangosti/The Denver Post via Getty Images

22 energy stocks to buy

Goldman Sachs bucketed its top energy stock picks into a handful of categories, which we simplified below. 

Companies that make clean energy or sell clean technologies: 

  • NextEra Energy
  • Sunnova Energy
  • First Solar

Companies that produce, transport, or refine fossil fuels: 

  • Halliburton
  • Suncor Energy
  • EOG Resources
  • Plains All American
  • Schlumberger
  • Hess
  • Canadian Natural
  • EQT
  • MPLX
  • TC Energy
  • Phillips 66
  • Marathon Petroleum 
  • Sempra Energy
  • Cheniere Energy

Companies involved in water infrastructure: 

  • Essential Utilities
  • American Water
  • Evoqua

Utilities or other energy producers: 

  • DTE Energy
  • Exelon

10 companies to sell

Meanwhile, the bank says the following 10 energy firms are likely to underperform the broader market. In some cases it's because the companies are priced too high, the bank says, or they're impacted by an oversupply of refining capacity.

  • Imperial Oil 
  • Range Resources
  • Marathon Oil 
  • Continental Resources
  • JK Solar
  • Maxeon Solar Technologies
  • Valero Energy
  • CVR Energy
  • Enbridge
  • ONEOK

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