It used to be one of the most important areas of the market. Now, investors hardly give it a second thought...
When the economy was driven by industrials, energy stocks were crucial. Oil and gas fueled growth. And many of the world's largest, most important companies came from the energy space.
Today's economy is different. Technology drives the most growth. Energy is smaller... less important... and often forgotten.
Energy stocks only make up about 3% of the S&P 500 Index today. But that doesn't mean you should ignore them right now.
This sector recently broke out to its first new high since 2024. And according to history, we can expect the gains to continue...
Outperformance Is on the Way for This Sector
Energy has been through a tough couple of years. By the end of last year, the sector was barely up since the middle of 2022. It was one of the worst performers in 2024... rising just 8%.
That's all changing in 2026, though. Energy has already eclipsed its 2024 return with a gain of 14% this year. And that makes energy one of the best performers so far in 2026.
Importantly, that strong return was part of a major breakout. Energy stocks recently hit a new 52-week high – which was their first new all-time high since 2024. Take a look...
After going nowhere for years, energy stocks are finally breaking out. And that tends to be a bullish signal for the sector.
Specifically, the sector has hit a new 52-week high about once a year since our data begins in 1989. And history tells us it usually means outperformance is on the way. Take a look...
Energy stocks have a history of solid returns, seeing typical annual gains of 5.9%. But you can do better than that if you buy after a breakout like we just saw.
Similar setups led to 4.1% gains in six months and 8.2% gains in a year. That's solid outperformance. Plus, the sector was higher a year later 69% of the time, giving it a decent win rate.
These aren't massive returns. But they show that when energy breaks out, it tends to keep winning.
Folks have forgotten this fact. Heck, they've forgotten about energy stocks entirely. But this is a trend you need to pay attention to.
In today's market, the biggest stocks aren't the only ones winning anymore. All kinds of assets are rising in 2026... many of them faster than the largest U.S. stocks. And that means you need to keep your eyes open and be willing to buy out-of-the-box opportunities.
If you can do that, you'll perform well this year. And energy stocks are a great place to consider investing right now.
Good investing,
Brett Eversole
Further Reading
"Investors are always looking for a reason to sell," Brett writes. Most folks are afraid of suffering long-term losses – so they're spooked into selling as soon as stocks hit all-time highs. But history shows these are actually great times to buy.
"Bull markets don't die with a whimper," Dr. David Eifrig says. Wall Street is expecting stocks to rise this year... And there are plenty of other signs that call for a strong 2026. That means this bull market likely hasn't peaked yet.