Top 3 Stocks to Buy Now as Energy Sector Hits Buy Zone

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After showing relative strength in the first quarter, the energy sector and the Energy Select Sector SPDR Fund ETF NYSEARCA: XLE trended lower in the second quarter, recouping most of their gains. Now up just over 5% year-to-date, the sector is underperforming the market and its benchmark. However, the XLE ETF's recent dip to its 200-day SMA presents a potential buying opportunity. Three stocks that show promise for investors looking to gain exposure to the sector are Williams Companies, Occidental Petroleum, and Exxon Mobil. Let's delve into the details. Get Exxon Mobil alerts: Sign Up The Energy Sector Dips into Potential Buy Zone Energy Select Sector SPDR Fund Today XLE Energy Select Sector SPDR Fund $90.27 +1.63 (+1.84%) 52-Week Range $76.72 ▼ $98.97 Dividend Yield 3.57% Assets Under Management $36.88 billion Add to Watchlist After an impressive start to the year, the XLE ETF has seen a pullback, now trading near its 200-day simple moving average (SMA). This level is considered a significant area of interest and potential support. A bounce or momentum shift might follow if the ETF finds support here and establishes a higher low. Investors looking to capitalize on this dip and gain exposure to the sector could consider the following stocks, which have demonstrated relative strength or bullish activity. Exxon Mobil Near 200-Day SMA: A Buying Opportunity? Exxon Mobil Today XOM Exxon Mobil $111.74 +2.36 (+2.16%) 52-Week Range $95.77 ▼ $123.75 Dividend Yield 3.40% P/E Ratio 13.69 Price Target $133.71 Add to Watchlist Like the overall sector, Exxon Mobil Corporation NYSE: XOM is trading near its 200-day SMA, presenting a potential buying opportunity from a risk-reward standpoint. The energy giant has outperformed the sector, up over 9% year-to-date. XOM is appealing, with a P/E ratio of 13.4 and an attractive dividend yield of 3.4%. Analysts are bullish, forecasting a 23% upside based on the consensus price target. The stock holds a moderate buy rating from eighteen analysts. Confidence in Occidental Petroleum's Future Prospects Occidental Petroleum Today OXY Occidental Petroleum $62.44 +1.18 (+1.93%) 52-Week Range $55.12 ▼ $71.18 Dividend Yield 1.41% P/E Ratio 17.06 Price Target $71.50 Add to Watchlist Occidental Petroleum NYSE: OXY has a P/E ratio of 16.7 and a dividend yield of 1.4%. While the stock has underperformed the sector, it recently found support near $60 and shows signs of bouncing. Notably, Berkshire Hathaway has increased its stake in OXY, now holding roughly 29% of the company, worth $15.4 billion. This significant investment signals confidence in OXY's future prospects. Recent Breakout Indicates Upward Momentum for Williams Companies Williams Companies Today WMB Williams Companies $42.40 +0.59 (+1.41%) 52-Week Range $30.26 ▼ $42.60 Dividend Yield 4.48% P/E Ratio 17.82 Price Target $41.42 Add to Watchlist Williams Companies, Inc. NYSE: WMB operates as an energy infrastructure company in the United States. WMB has been a standout performer this year, with shares surging over 20% year-to-date. The stock boasts an impressive dividend yield of 4.5% and a modest P/E ratio of 17.5. In its most recent earnings report on May 6th, 2024, WMB reported $0.59 earnings per share, beating the consensus estimate of $0.49. The company earned $2.77 billion during the quarter, surpassing analysts' expectations. WMB's recent breakout from a lengthy consolidation suggests solid upward momentum. Technical and Fundamental Factors to Consider in Energy Investments The energy sector, represented by the XLE ETF, has pulled back to a potentially compelling buy zone near its 200-day SMA. XOM, OXY, and WMB present attractive opportunities for investors seeking to gain sector exposure. ExxonMobil offers strong performance and a solid dividend yield, Occidental Petroleum shows promise with Berkshire Hathaway's significant investment, and Williams Companies stands out with impressive year-to-date performance and robust earnings. As always, investors should consider technical and fundamental factors before making any investment decisions, and traders looking to capitalize on a bounce should look to be reactive once the sector finds crucial support and confirms a higher low above its 200-day critical support area. Before you consider Exxon Mobil, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Exxon Mobil wasn't on the list. While Exxon Mobil currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here