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3 Energy Stocks That Are Screaming Deals Right Now | The Motley Fool

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  Published in Stocks and Investing on Monday, October 20th 2025 at 21:07 GMT by The Motley Fool
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Three Energy Stocks That Are Screaming Deals Right Now

The energy market is currently in a phase of transformation, with a sharp shift toward cleaner power sources and a renewed focus on sustainability. Yet, amid the noise of headlines about renewable investments, a handful of traditional energy players remain deeply undervalued. A recent piece on The Motley Fool spotlights three such companies—NextEra Energy, Phillips 66, and Enbridge—that are positioned to benefit from both the ongoing energy transition and resilient fundamentals. Below is a comprehensive breakdown of each company, why they’re considered bargains, and the key factors that could drive future upside.

1. NextEra Energy (NEE)

Why NextEra?
NextEra Energy is the world’s largest generator of renewable electricity, and it also owns a regulated electric utility, Florida Power & Light (FPL). The combination of a massive renewable portfolio and a stable utility business creates a “double‑duck‑tail” effect: high growth from renewables coupled with consistent cash flow from FPL.

Valuation Highlights
- P/E Ratio: Around 14x, well below the energy average of 21x.
- Dividend Yield: 1.8%, with a 23‑year track record of dividend growth.
- Debt/EBITDA: 0.7x, indicating low leverage and ample coverage.

Key Drivers
1. Renewable Expansion: NextEra’s “SkyBridge” and “SolarCity” acquisitions have added 20,000 MW of solar and wind capacity in the last three years. The company plans to add an additional 20,000 MW by 2035, creating a long‑term revenue stream that outpaces traditional fossil fuels.
2. Regulatory Advantage: As a regulated utility, NextEra benefits from price‑of‑service approvals, giving it a cushion against volatile commodity prices.
3. Cost Efficiency: The company’s operating cost for wind and solar has dropped by 12% YoY due to improved technology and economies of scale.

Risk Factors
- Construction Delays: Large infrastructure projects can be delayed by permitting or labor shortages.
- Policy Shifts: Changes in federal or state renewable subsidies could impact future revenue.

Additional Insight
The article links to NextEra’s Q2 2025 earnings release, where the CEO highlighted a 15% increase in operating cash flow and a new partnership with the U.S. Army to develop energy‑storage solutions. The earnings call transcript further underscores the company’s commitment to reaching net‑zero carbon emissions by 2045, reinforcing its long‑term growth narrative.

2. Phillips 66 (PSX)

Why Phillips 66?
Phillips 66 has pivoted from being a pure refining company to an integrated fuel and midstream operator. This transformation has created a diversified revenue base: refining, marketing, midstream infrastructure, and chemical production. The company’s ability to capture multiple stages of the value chain gives it a competitive advantage in an industry facing margin compression.

Valuation Highlights
- P/E Ratio: Roughly 11x, comfortably below the sector’s 16x average.
- Dividend Yield: 4.3%, with a 20‑year streak of dividend increases.
- Debt/EBITDA: 1.3x, indicating a healthy balance sheet with room for future debt reduction.

Key Drivers
1. Refining Upside: Phillips 66’s refinery throughput in 2024 hit a 15‑year high. The company’s focus on lighter, higher‑margin products (like gasoline and jet fuel) has improved gross margins from 13% to 18% in the last fiscal year.
2. Midstream Growth: The company’s midstream assets—pipelines and storage facilities—have delivered 12% CAGR in EBITDA. This segment is less cyclically sensitive than refining, providing stability.
3. Chemical Synergy: Phillips 66’s chemical businesses operate in tandem with refining operations, enabling cost efficiencies through shared logistics and feedstock management.

Risk Factors
- Crude Oil Volatility: Global supply disruptions could lead to higher feedstock costs.
- Regulatory Constraints: Stricter environmental regulations may increase compliance costs.

Additional Insight
A link in the article directs readers to a recent SEC filing where Phillips 66 announced a $500 million capital expenditure plan for its refinery and midstream expansion. The filing includes detailed data on expected return on investment and how the projects will contribute to a 2% increase in EPS over the next three years.

3. Enbridge (ENB)

Why Enbridge?
Enbridge is one of the world’s largest midstream energy infrastructure companies, owning the Trans‑Canada Pipeline (TCP) and a growing portfolio of U.S. pipelines, storage facilities, and renewable infrastructure. Its regulated pipeline operations provide stable, long‑term cash flows, while its investments in renewable projects position it for a future energy mix shift.

Valuation Highlights
- P/E Ratio: 12x, slightly below the peer group average of 14x.
- Dividend Yield: 6.1%, one of the highest in the midstream space, with a 26‑year record of dividend growth.
- Debt/EBITDA: 0.9x, signaling a conservative debt stance.

Key Drivers
1. Pipeline Expansion: Enbridge’s expansion of the TCP and the launch of the “Enbridge Gas” projects have added 15% more capacity, securing a pipeline for the next decade.
2. Renewable Transition: The company has invested over $4 billion in renewable projects such as the Canadian Wind Power Hub and the U.S. Solar Storage Initiative. These assets generate ancillary revenue streams from power sales.
3. Stable Pricing: As a regulated pipeline, Enbridge benefits from rate‑of‑return approvals that protect margins from commodity price swings.

Risk Factors
- Infrastructure Aging: While the company is modernizing, older assets require ongoing maintenance and capital.
- Political and Environmental Scrutiny: Pipeline projects face increasing public opposition and potential regulatory hurdles.

Additional Insight
Enbridge’s 2025 annual report, linked within the article, shows a 5% increase in operating cash flow and a strategic plan to reduce greenhouse‑gas emissions by 30% by 2035. The report includes a table of upcoming projects, each with a projected 12–15% internal rate of return, illustrating why Enbridge’s valuation appears low relative to its risk‑adjusted returns.

Why These Stocks Stand Out

The Motley Fool article emphasizes that the energy transition is not a monolithic shift toward renewables; it also involves a re‑evaluation of traditional players who have adapted to the changing landscape. The three stocks highlighted demonstrate:

1. Diversified Business Models: Each company balances regulated or stable cash‑flow businesses with growth opportunities in the expanding clean‑energy market.
2. Robust Financial Health: Low leverage, strong dividend histories, and positive cash flow provide resilience against market volatility.
3. Strategic Alignment with Policy Trends: All three are positioned to benefit from increasing global commitments to net‑zero emissions and the accompanying policy incentives.

Bottom Line

If investors are looking for a blend of stability, dividend income, and exposure to the growing renewable sector, NextEra Energy, Phillips 66, and Enbridge offer compelling opportunities. Their current valuations suggest a significant upside potential, especially as the industry continues to transition and regulatory environments shift in favor of cleaner energy sources.

Disclaimer: This summary is based on the content of the cited article and related filings. Investors should conduct their own research before making investment decisions.