2 Energy Stocks That Are No-Brainer Buys While Oil Prices Stay Elevated

Oil prices have surged over the past month as the Middle East conflict intensified. Those higher prices are weighing down many sectors with higher production and logistics expenses, but they're generating strong tailwinds for big oil and energy companies.

Investing in those stocks can be tricky, since they tend to swing with oil and gas prices, but sticking with them for years instead of quarters smooths out that near-term volatility. If you can maintain that disciplined approach, then you can consider buying ExxonMobil (NYSE: XOM) and Energy Transfer (NYSE: ET) as no-brainer ways to profit from soaring oil prices.

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ExxonMobil

ExxonMobil, one of the world's largest publicly traded oil and gas companies, is involved in upstream exploration and production, downstream refining and marketing, and the production of plastics and petrochemicals. Rising oil prices boost its upstream profits, generate more cash to fund its dividends and buybacks, and improve the economics of its larger energy projects.

Like its rival Chevron, ExxonMobil gets most of its oil from the United States. Its largest oil fields are in the Permian Basin, and it also drills offshore in the Gulf of Mexico. Most of its overseas growth comes from Guyana (one of the world's fastest-growing oil regions), as well as other Latin American countries, Canada, the Middle East, Africa, and Asia.

Over the next few years, ExxonMobil will continue to generate most of its revenue in the U.S. -- but a growing share will likely come from Guyana. Its other markets should also continue to produce oil at a steady rate, even as it weathers some near-term headwinds in the Middle East.

From 2021 to 2025, ExxonMobil grew its EPS at a steady 6% CAGR, even as oil prices experienced fluctuated widely. From 2025 to 2028, analysts expect its EPS to increase at a 14% CAGR as it expands its Permian Basin and Guyana fields. The expansion of its liquefied natural gas (LNG), chemicals, and low-carbon businesses should complement that growth. That's an impressive growth trajectory for a stock that trades at 19 times this year's earnings. ExxonMobil also pays a forward yield of 2.6%, and it's raised its payout annually for 43 consecutive years. That stability makes it one of the safest ways to increase your exposure to rising oil prices.

Energy Transfer

If you want some exposure to the oil market but think upstream and downstream companies are too tightly tethered to oil prices, then it's a good idea to invest in midstream pipeline companies -- which merely charge those companies "tolls" to pump oil and gas through their pipes.

One of the safest midstream plays is Energy Transfer, which expanded rapidly over the past few years and now operates over 140,000 miles of pipeline across 44 states. It operates as a master limited partnership (MLP), which blends a return of capital with its own income to pay distributions that are more tax-efficient than conventional dividends.

Energy Transfer pays an attractive forward yield of 7%, and it's raised its distributions annually for the past five consecutive years. Its adjusted distributable cash flow (DCF) dipped 2% to $8.2 billion in 2025, but it still comfortably covered its $4.6 billion in total distributions.

Rising oil prices will drive big oil companies like ExxonMobil and Chevron to ramp up production, and those tailwinds will enable midstream MLPs like Energy Transfer to grow their DCF and earnings per unit (EPU).

From 2021 to 2025, Energy Transfer's EPU fell from $1.89 to $1.21 as it acquired more companies, its costs rose, and it faced tough comparisons to its post-pandemic acceleration in 2021. But from 2025 to 2028, analysts expect its EPU to grow at a 12% CAGR to $1.71 as it continues to expand in the Permian Basin and export more natural gas products. That's a solid growth trajectory for a stock that trades at 12 times this year's EPU.

Leo Sun has positions in Energy Transfer. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.