My 3 Highest-Conviction Energy Stocks for the Second Half of 2026

What a year it's been for energy stocks. Geopolitical whiplash and surging electricity demand from AI data centers are combining to put energy companies in the spotlight. Investors have a lot to choose from today. Here are my highest-conviction picks for the second half of 2026.

Constellation Energy shines

Nuclear, in particular, is having a significant moment in the U.S. and beyond. Constellation Energy (NASDAQ: CEG) owns the largest fleet of nuclear power plants in the country. Nuclear energy's ability to meet growing power needs is currently unmatched. Hyperscalers building data centers are looking to Constellation to meet the moment. Agreements with companies such as Microsoft and Walmart are bringing in new revenue for CEG.

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Surprisingly, Constellation Energy stock has not had a great year so far. Down more than 25% in 2026, the shares have been weighed down by a combination of factors, including the Calpine acquisition, institutional sell-offs, and backlash and moratoriums against data centers. The selling of Constellation shares is largely due to the company's more than 500% rise over the past five years.

Usually, the narrative around utilities centers more on income than growth, but that's not the case with Constellation. The company pays a modest dividend, but the surge in energy demand is likely to drive substantial growth in the coming years. The company anticipates earnings-per-share growth of 20% through 2029. Constellation offers investors a less speculative entry point into AI's insatiable energy demand.

Lastly, the company has authorized a $5 billion share buyback program and anticipates free cash flow exceeding $8 billion through 2027. This, combined with new long-term power purchase agreements, is setting Constellation Energy up to dominate for the foreseeable future.

Enterprise Product Partners pays

For investors interested in a boring but consistent business, Enterprise Product Partners (NYSE: EPD) fits the bill. EPDis one of the largest midstream operators in the country and operates on a fee-based model for moving, storing, and processing natural gas, NGLs, crude, and petrochemicals. Where it's positioned in the industry largely insulates it from the daily swings in oil and gas prices.

EPD also offers investors a high yield of approximately 5.7%. The stock's current forward P/E ratio is around 14, and its PEG is 1.58, suggesting the stock is fairly or potentially undervalued.

In the first quarter of 2026, the company generated $2.7 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA), a 10% increase from the prior year. According to management, it was "an exceptional quarter," and in the near term, the company expects discretionary free cash flow to be split between share buybacks and debt reduction. The strong balance sheet and reduced capital spending in 2026 should free up more cash for further buybacks and distribution hikes.

EPD is well positioned to capitalize on AI-driven demand for natural gas and LNG exports. So there's both income and growth visibility for the company.

NextEra is winning the next chapter

NextEra Energy (NYSE: NEE) might actually be the best-positioned energy company to capture the AI power needs. NextEra owns Florida Power & Light, a traditional regulated utility company that provides incredibly reliable cash flow. On the other side, NextEra is growing its renewables division with an increasingly robust backlog of data center contracts. The FP&L provides the foundational stability for the renewables arm to grow.

The company's first-quarter earnings per share grew 10% year over year to $1.09. The management team expects at least 8% annual growth in adjusted earnings per share through 2032. NextEra's dividend is modest, yielding about 2.83% at the current price. The stock trades at a slight premium, but the growth outlook shouldn't dissuade long-term investors.

Three standout choices

These three companies all excel in different areas of the energy industry. Whether you're adding companies for growth or income, these businesses offer distinct paths to returns for shareholders and are my highest-conviction picks in the sector for the second half of 2026.

Catie Hogan has positions in NextEra Energy. The Motley Fool has positions in and recommends Constellation Energy, Microsoft, NextEra Energy, and Walmart. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.