Seeking the good oil stocks to buy now? The commodity noise has been cut in this analysis to display energy stocks that are undervalued and have strong cash flow in terms of balance sheet, and have an upside through 2026.
Overview
The oil prices are highly in the spotlight of investors who are seeking good oil stocks to buy now. Prices of commodities are significant, but they are not always associated with the value of the shareholders. The question that eventually leads to the long-term returns is whether the company realizes returns that are above the cost of equity that the company has to cover. The article evaluates oil stocks using the indicator that is the Residual Earnings per Share (REPS), based on valuation that is the actual economic value creation rather than the platform profits.
The residual earnings are regarded as the amount of earnings realized on the charge to the equity capital. Positive REPS: This implies that value has been generated; negative REPS: This implies that value has been destroyed. One of the steps that assists the investors to determine the companies that are merely playing around on the price cycles and those that can generate excess returns at some level of stability is the study of the trends in the REPS of the last ten years.
In this article, the good oil stocks to be bought at present based on two ways of ranking the stocks:
- General quality (ratio-style) analysis using REPS behaviour
- REPS momentum and improvement analysis
REPS-Based Quality (Stability + Persistence)
The REPS data gives definite rankings based on investor objectives.
- EOG Resources (EOG)
- Enterprise Products Partners (EPD)
- Exxon Mobil (XOM)
- Chevron (CVX)
- ConocoPhillips (COP)
Ranking by REPS Momentum (Improvement Over Time)
- Chevron (CVX)
- EOG Resources (EOG)
- Exxon Mobil (XOM)
- Enterprise Products Partners (EPD)
- ConocoPhillips (COP)
These rankings demonstrate that the best oil stocks to buy now in 2026 are contingent on whether an investor is keen on good quality and stability or cyclical recovery upside.
Residual Earnings
Table 1. Residual Earnings per Share (2016–2024)
| Year | COP | CVX | EOG | EPD | XOM |
| 2016 | NA | -8.5 | -4.2 | 0.23 | -2.4 |
| 2017 | NA | -2.8 | 1.8 | -0.67 | 0.6 |
| 2018 | NA | 0.0 | 3.1 | 0.87 | 0.5 |
| 2019 | NA | -6.7 | 1.4 | -0.58 | -1.2 |
| 2020 | NA | -10.7 | -4.8 | 0.64 | -10.0 |
| 2021 | NA | 1.2 | 4.6 | 0.99 | 1.7 |
| 2022 | 11 | 11.2 | 9.4 | 1.35 | 9.5 |
| 2023 | 5.1 | 3.0 | 8.9 | 1.32 | 4.0 |
| 2024 | 03.6 | 1.0 | 6.3 | 1.41 | 3.2 |
Figure 1. COP — Residual Earnings per Share (2016–2024)
Shows extreme pre-2020 outliers; later years decline can be seen.
Figure 2. CVX — Residual Earnings per Share (2016–2024)
Illustrates strong rebound and high volatility.
Figure 3. EOG — Residual Earnings per Share (2016–2024)
Demonstrates sustained post-2022 value creation.
Figure 4. EPD — Residual Earnings per Share (2016–2024)
Highlights stability and steady improvement.
Figure 5. XOM — Residual Earnings per Share (2016–2024)
Shows deep 2020 drawdown followed by recovery and normalization.
Method 1: General Ratio-Style Quality Analysis
The Traditional ratio analysis is the measurement of the profitability, the stability, and the safety of the losses. Since external financial ratios are forbidden, this method replicates that line of thought to the behaviour of REPS:
- The returns on equity that are above cost are a proxy for a positive level at a sustained level.
- The lower volatility is less than the previous volatility is a proxy of the quality of earnings.
- Smaller drawdowns: Proxy of risk control.
EOG Resources (Rank #1 – Quality)
The profile of the quality of EOG is most favourable among all stocks. The company shows four years of positive residual earnings with a high level in 2022 and a high level in 2024 following negative REPS in 2020. This extension shows that EOG does not merely take advantage of the existing price spikes, but structurally, it is at a position of earning more than its equity charge does.
Not only is value creation high and repeatable, a major requirement of intrinsic value-oriented portfolios, but also is that EOG is among the investors to purchase based on the recommendation of purchasing good oil stocks today to secure a good future. According to Yahoo Finance, the key activities that EOG Resources is engaged in are exploration and production of crude oil and natural gas, which align with its high operational leverage in favourable market conditions (Yahoo Finance, EOG).
Enterprise Products Partners (Rank #2 – Quality)
The dataset pattern of REPS of EPD is the most stable one. Although absolute values are below the ones of the upstream, REPS remains positive after 2020 and grows steadily up to 2024. It is important to note that the years of stress are not characterized by extreme negative REPS in EPD.
This could be of specific relevance to the investor who desire to purchase energy stocks to buy now that will be less volatile and will have a predictable pattern of cash-flow. Yahoo Finance describes Enterprise Products Partners as a midstream energy company, which provides pipeline and storage, and that is why this profile of REPS is less bumpy than buy and sell producers (Yahoo Finance, EPD).
Exxon Mobil (Rank #3 – Quality)
XOM possesses a normal trend of integrated majors. The company has a negative sharp decrease in 2020 and has a large recovery in 2021-2022 and a middle recovery in 2023-2024. This means that when the environment is positive, Exxon can make good residual earnings, whereas when the environment is bad, Exxon will be liable to make compression as a result of the cycles.
Exxon may look like a mixed case to investors who put much emphasis on the intrinsic value of oil stocks, whereby the upside of the recoveries is high, but the downside risk is highly significant. Exxon Mobil has also traded in exploration, refining, chemicals, and energy products and that is what makes it resilient and complex, according to Yahoo Finance (Yahoo Finance, XOM).
Chevron (Rank #4 – Quality)
Chevron’s history regarding REPS is more unstable. As much as the company has the highest single- year REPS as compared to its counterparts in 2022, the company has had a history of negative residual earnings in the past years, with a significant decrease in 2020.
As a result, Chevron comes second to quality despite its remarkable results in terms of rebound. In valuation terms, this will be a business with the capacity to generate high excess returns at a lower regularity. Yahoo Finance states that Chevron is an upstream and downstream integrated energy company, in keeping with its cyclical trend of REPS (Yahoo Finance, CVX).
ConocoPhillips
The COP data as REPS contain extreme outliers, and the values for the year 2020 are extremely large and negative, and thereafter the values decline. These misrepresentations render the usual comparisons flawed.
COP does not rank directly under this method.
Method 2: REPS Momentum and Improvement Analysis
The second approach is considered to make a long-term change as compared to the absolute level. It is a reflection of the comparison of the post-2022 (2022 -2024) period to the past years to identify those companies that are increasing the value-creation capacity the most.
Chevron (Rank #1 – Momentum)
The most promising performance in terms of improving the REPS is in Chevron, returning to a few negative years and reaching a very high level in 2022 and beyond. This is one of the radical changes that make Chevron the leader in momentum despite its low-quality rating.
To the investors who have been considering the undervalued oil stocks, the increase in the REPS of Chevron implies that the market expectations are unlikely to follow the operational re-emergence of the company.
EOG Resources (Rank #2 – Momentum)
EOG is characterized by a high increase rate and duration. Unlike Chevron, EOG REPS remained high after 2022 but gradually declined, which means that the profits are not necessarily the cyclical ones.
This is why EOG is ranked among the top under either of the two ranking systems, which further justifies the ranking of EOG as one of the best oil stocks to buy now in 2026.
Exxon Mobil (Rank #3 – Momentum)
Another example is Exxon recovery, which has grown out of a pathetically negative 2020 to a strong positive REPS in 2022, but not as impressive as Chevron. It is later normalized in the middle of the pack with this method.
Enterprise Products Partners (Rank #4 – Momentum)
EPD’s improvement is steady but less dramatic. Because the company avoided extreme negatives, its “rebound” is naturally smaller. This lower momentum score should not be interpreted as weakness; rather, it reflects structural stability.
The improvement of EPD is not as sharp and slow. The company has not attempted to go to extreme negatives, and this is why the rebound is smaller as a result. This poor score on the momentum cannot be considered a weakness, but it is a measure of structural stability.
ConocoPhillips: Exception Case
COP will be measured on 2 sets of REPS as follows:
- Group 1: 2020
- Group 2: 2022–2024
The two groups create a perception of distribution about zero, meaning that the remaining earnings were normalized as compared to continuous value creation. COP, therefore, is a thesis-driven stock and not a REPS-screen stock (Yahoo Finance, COP).
Further Reading : Cheap Oil Stocks: The Undervalued Energy Winners Set to Break Out in 2026
Final Investment Perspective for 2026
REPS analysis is a disciplined approach to valuation that gives a good oil stocks to buy now, so that could look beyond the short-term fluctuations of the oil prices.
The 2026 future, therefore, is different depending on the nature of the stock. Comprehensive quality EOG Resources has the most because its post-2021 REPS is large and sustained and not a one-time benefit of its structure. Enterprise Products Partners will be the optimal option in case investors are concerned with stability, since the REPS picture shows that the company is not highly volatile, and its performance has been increasing steadily, which means that the company is generating a good cash flow.
Chevron is the most attractive rebound plot because it is insensitive to the cyclical recovery factor and therefore is attractive to investors with that orientation as compared to Exxon Mobil, which has balanced exposure and high upside at the expense of declines. Due to the severe historical aberrations in REPS, ConocoPhillips is a special-case investment, the performance of which is more sensitive to future performance than to historical averages.
The central takeaway in this case is that oil markets do not positive impact on all energy stocks. By calculating residual earnings over headline earnings, investments would fare well in determining temporary earnings jumps and the true worth created by a business, which would assist in an even more appropriate selection of stocks and in better risk management, in the establishment of a portfolio to produce long-term earnings up to the year 2026.
All calculations and valuation estimates are FinancialBeings’ own, based on data sourced from SEC filings XOM (10K and 10Q), COP (10K and 10Q), EPD (10K and 10Q), CVX (10K and 10Q) and EOG (10K and 10Q), use or reproduction before prior approval is prohibited.
Frequently Asked Questions (FAQs)
What are the best oil stocks to buy now in 2026?
The best oil stocks to buy now in 2026 are the best suited based on the investors concentrating on quality, stability or cyclical increase. Based on the Residual Earnings per Share (REPS), it is EOG Resources that will create its value over time, Enterprise Products Partners that will be stable and capable of cash flows, Chevron that will be able to recuperate and Exxon Mobil that will be balanced and integrated. ConocoPhillips is not an exception as well due to historical outliers of REPS and is incapable of being compared to other cases.
Are oil stocks undervalued right now?
Numerous investors believe that the traditional oil inventories have been undervalued at the prevailing worth owing to sentiment, crude prices have dropped, and capital has been drained out to other enterprises like technology, leading to gaps in valuation, compared to the long-term earning ability. Some strategists argue that in comparison with future cash flows and dividends, energy shares seem cheap, and this can be a bargain, especially when demand surpasses supply later on in the decade. However, the anticipations of wider supply excess and low oil prices in the future (through 2026) mean that the value which can be achieved is limited unless the market processes narrow or the earnings fundamentals are discovered to be above average.
How do investors estimate the intrinsic value of oil stocks?
The intrinsic value of oil stocks is established by investors through valuing future cash flows in the present (typically in the Discounted Cash Flow (DCF) models), analyzing reserves, cost of production and future oil prices. Free Cash Flow (FCF), NAV (Net Asset Value) of reserves, and the opportunity to compare P/E ratios with the industry rates are among the most significant ones.
Usama Ali
Usama Ali is the founder of Financial Beings and a self-taught investor who blends classic valuation study with insights from psychology. Inspired by works from Benjamin Graham, Aswath Damodaran, Stephen Penman, Daniel Kahneman, and Morgan Housel, he shares independent, data-driven research to help readers connect money, mind, and happiness.
Disclaimer
The content provided herein is for informational purposes only and should not be construed as financial, investment, or other professional advice. It does not constitute a recommendation or an offer to buy or sell any financial instruments. The company accepts no responsibility for any loss or damage incurred as a result of reliance on the information provided. We strongly encourage consulting with a qualified financial advisor before making any investment decisions.
