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Goldman Sachs Spotlights Undervalued Energy Stocks Set to Outperform

  //stocks-investing.news-articles.net/content/202 .. undervalued-energy-stocks-set-to-outperform.html
  Published in Stocks and Investing on Wednesday, December 10th 2025 at 2:03 GMT by CNBC

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Goldman Sachs Highlights a Hidden Trove of Energy Stocks Set to Outperform – A Deep‑Dive Summary

On December 10, 2025, CNBC ran a feature article that pulled back the curtain on Goldman Sachs’ latest equity research, spotlighting a group of energy stocks that the investment bank’s analysts believe are poised to outperform the broader market but remain underappreciated by most investors. The piece, titled “Goldman Sachs: These Energy Stocks Are Outperforming – But Underappreciated,” blends macro‑economic analysis, company‑specific fundamentals, and a forward‑looking view of the evolving energy landscape. Below is a comprehensive summary of the article’s key take‑aways, enriched by insights from linked research notes and market commentary.

1. Market Context: The Energy Transition on a Tightrope

Goldman Sachs’ research team sets the stage by painting a picture of the global energy transition that’s been accelerating in recent years. While the world is moving toward decarbonization, the article argues that the transition is not linear: “A surge in renewable investment is now being offset by a persistent need for base‑load and peaking gas capacity.” The analysts note that the 2025‑2026 window is a “critical juncture” where many traditional energy companies will reap upside from a combination of:

• Higher natural‑gas demand in the U.S. and Europe due to winter weather volatility and supply disruptions in Russia.
• Increasing oil prices spurred by geopolitical tensions in the Middle East and a tightening of OPEC+ production quotas.
• A slower transition to renewables in emerging markets, where infrastructure deficits and regulatory uncertainty keep fossil‑fuel consumption high.

The article cites Goldman Sachs’ own earnings forecasts for the next fiscal year, indicating a 12% upside for the energy sector versus a 4% overall market gain.

2. The “Underappreciated” List: Stocks That Are “Ready to Surge”

Goldman Sachs identifies seven energy stocks that it believes will outperform both their peers and the broader market. The piece offers a brief synopsis of each company’s business model, growth drivers, and valuation.

The analysts point out that all these companies are currently trading at attractive multiples relative to their historical averages and the broader energy sector. They also underline that each firm is well‑positioned to benefit from the “dual‑track” energy transition – i.e., maintaining traditional fossil‑fuel operations while investing in renewable and low‑carbon technologies.

3. Detailed Company Insights

Exxon Mobil (XOM)
Goldman Sachs highlights Exxon’s strategic LNG export deals with Europe and Asia, especially the new 2026 supply agreement with the UK. The analyst notes that Exxon's netback margin on LNG is projected to rise by 7% YoY thanks to favorable feedstock costs. The company’s dividend payout ratio of 50% is deemed “sustainably high” given its stable cash‑flow generation.

Chevron (CVX)
The report emphasizes Chevron’s expansion in the Gorgon LNG project in Australia and the company’s aggressive pipeline development in the Gulf of Mexico. Chevron’s margin cushion of $3.5 billion in 2025 is cited as a key buffer against price volatility.

Enbridge (ENB)
Goldman Sachs underscores Enbridge’s planned acquisition of 10% stake in the Gulf of Mexico’s natural‑gas infrastructure and its recent $4 billion refinancing at a low interest rate. The company’s dividend yield of 5.6% is seen as attractive for income investors.

Kinder Morgan (KMI)
The analyst mentions KMI’s planned addition of 10,000 ft of new pipeline capacity in Texas and Oklahoma, which is projected to add $700 million in EBITDA. The firm’s strong balance sheet – debt/EBITDA of 1.8x – is considered “highly defensive.”

Suncor (SU)
Suncor’s integrated oil‑to‑petroleum (O2P) model is highlighted as a competitive advantage. The company’s recent $500 million investment in carbon‑capture projects is framed as a hedge against future regulatory pressures.

Phillips 66 (PSX)
PSX’s midstream focus on refining, storage, and transportation is credited with maintaining “steady cash flows.” The analyst points out the company’s new 2025 joint venture in Brazil aimed at tapping the country’s growing petrochemical demand.

Occidental (OXY)
Goldman Sachs notes Occidental’s strategic acquisitions of low‑cost Permian assets and its active hedging program to lock in feedstock costs. The company’s high dividend payout ratio (55%) is highlighted as a sign of confidence in its cash‑flow generation.

4. Risks and Caveats

The article is careful to acknowledge the inherent risks in investing in the energy sector:

• Commodity price volatility: The “price‑risk” exposure is a major factor for all fossil‑fuel based stocks.
• Regulatory uncertainty: Potential tightening of carbon‑pricing rules in the U.S. and EU could compress margins.
• Geopolitical tension: Any escalation involving major oil producers could alter supply‑demand dynamics dramatically.
• Transition risk: A sudden acceleration in renewable adoption could erode the long‑term profitability of certain assets.

Goldman Sachs’s “caveat” is that the stocks on the list “will likely outperform only if the energy transition continues to unfold in a measured, incremental fashion.” The bank’s analysts also caution that “the upside potential is capped if a radical policy shift—such as a sudden EU carbon‑border adjustment—were to materialize.”

5. Complementary Resources and Further Reading

The CNBC article links to several supplementary pieces that enrich the reader’s understanding:

1. Goldman Sachs Research Note – “Natural‑Gas Market Outlook 2025–2030” – A technical briefing on supply‑demand dynamics in the North American gas market.
2. CNBC Segment – “Oil Prices Hit 2025 Highs” – An interview with a Goldman Sachs energy analyst discussing oil price drivers.
3. Bloomberg Data – “LNG Pipeline Expansion in the U.S.” – Interactive charts that show the pipeline capacity growth across key states.

These references provide readers with a more granular view of the data and analytical models that underpin Goldman Sachs’ thesis.

6. Bottom Line: A Call to Action

Goldman Sachs’ research team concludes that the current market environment presents a unique buying opportunity for investors who are willing to embrace the long‑term nature of the energy transition. The article’s core recommendation is:

• Add a diversified mix of the highlighted stocks to a portfolio that already contains broader energy exposure.
• Rebalance periodically to maintain exposure to both upstream (exploration & production) and downstream (midstream & refining) segments.
• Stay attuned to regulatory changes that could affect the valuation of these assets.

In sum, the CNBC feature paints a picture of a “goldmine” of undervalued energy equities that are positioned to benefit from a combination of rising commodity prices, strategic corporate actions, and an incremental but persistent energy transition. While acknowledging the risks inherent in the sector, Goldman Sachs is clear: “These companies are poised to deliver the best risk‑adjusted returns in the energy space over the next 12‑18 months.”