Best Stocks: A name that's a standout in its sector, with terrific fundamentals and nice chart set-up

CNBC

22-05-2025

(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh: One sector that's been down and out for most of this year has been energy. These stocks have not participated. Many of the blue chip names in the space have completely missed out on the rally this spring. So I thought it might be interesting to look at some of the better stocks in the energy sector as a prelude to a possible rotation. It's been my experience that paying attention to good stocks in a bad segment of the market is a nice way to be positioned for when the group comes back into favor. I prefer this idea as opposed to focusing on the cheapest or the hardest hit names and hoping for a bounce. Both approaches may be valid and produce good results, but for the purposes of the Best Stocks concept, we're looking for strength, not weakness. The Best Stocks in the Market list currently has four energy stocks on it — two high-yield dividend plays and two companies with more growth characteristics. We'll show you all the charts below and put the spotlight on the one that looks like the most interesting set-up. Best Stock spotlight: EQT Corp. (EQT) Sean: The energy sector has struggled in 2025. It is down 1.6% year-to-date, tied with healthcare as the second worst sector this year. Only 35% of S & P 500 Energy constituents are above their 50-day moving average and an abysmal 30% of constituents are above their 200-day moving average. Both of those technical readings are the lowest readings of any sector. As Josh mentioned, taking a look at what's been working within a poorly performing sector can give us insight into the highest quality stocks within that area of the market. Those four energy stocks on our list are EQT Corp. (EQT) , Expand Energy (EXE) , Williams Cos. (WMB) , and Kinder Morgan (KMI) . Both EQT and EXE are the more growth oriented of the four. Both firms are natural gas-focused exploration and production companies. EQT is the best of the bunch with a 21% YTD return, making it the second best energy stock this year, and the 35th best S & P 500 stock in 2025. EQT is an independent natural gas production company with operations in the Marcellus and Utica shales, located in the Appalachian Basin. The company also has a joint venture with Blackstone. All of the firm's operating revenue is generated within the U.S., with most revenue flowing from the Marcellus Shale field and through the sale of natural gas. EQT has the second-highest expected EPS growth within S & P 500 Energy this year at 110% year-over-year EPS growth (just behind another stock on our list, EXE), and they expect 47% growth next year. What separates EQT from EXE (which we will hit next) is its profitability. EQT's operating margins are 17% while EXE's are 2%. EQT trades at a forward PE of 11x, all while ramping up its bottom line earnings. There's some institutional ownership here, too. As of Q1, big-name hedge funds like AQR, DE Shaw, and Millennium were ramping up ownership in the stock. It's a value stock acting like a momentum stock, which are great characteristics to have within a poorly performing sector. EXE has a good looking chart too: As of EXE's latest earnings call in April, it was the U.S.'s largest natural gas producer with holdings spanning 1.9 million acres. Free cash flow hit $533 million up from $131 million the previous year. EXE is also very well run. An entire portion of its earnings presentation is focused on a capital return framework. This includes a base dividend, an allocation of $500 million to pay down debt, plans to utilize additional free cash flow for variable dividends, and further balance sheet strengthening. The other two energy stocks on our list are WMB and KMI. Both of these firms are slower movers, operating midstream pipelines and refineries within the US. WMB has a dividend yield of 3.45% and KMI has a dividend yield of 4.25%. Both of these firms are holding up well in what's been a challenging environment for energy stocks, and they provide a bit more of a defensive posture relative to EXE and EQT. Risk Management Josh: What I like about the set-up for EQT is how well defined the risk is — the $50-$52 area had been resistance up until a month ago so it should become a support level in a rocky tape. So long as that level holds, I think you can be long. RSI in the low 60's confirms the recent retest of the highs but it is not at all overheated. Look for a high-volume breakout away from the $56 area as confirmation that the trade's going to work. 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