Top 3 US Energy Stocks for 2026, According to William Blair

By Andrew Bary

AI was the hottest investment theme in a hot stock market in 2025. Next year could be a very different one for stockpickers.

Investors have piled into a range of companies with exposure to artificial intelligence this year, helping spawn a boom in a range of speculative stocks in areas like robotics, nuclear power, and space. Barron's capitalized on the trends with Alibaba Group Holding, Alphabet, and ASML Holding, as well as other winners, including Citigroup and Uber Technologies, in our top 10 picks for 2025.

Moderna was the big loser among our 10 selections, falling about 30%, but that didn't prevent our picks from returning an average of nearly 28%, including dividends, against 15% for the S&P 500. (We measure the annual performance from the time we publish in mid-December.)

We don't expect the stock market to be as strong in 2026. After three years of outsize returns — roughly 25% in both 2023 and 2024, and nearly 20% in 2025 — the S&P 500 could take a breather. The market valuation is stretched, with the index trading for 22 times projected 2026 earnings.

Barron's takes a value-oriented tack in our favorite stocks for 2026. Most of them trailed the S&P 500 in 2025 and are ready to play catch-up. Walt Disney and Exxon Mobil are industry leaders trading for around 16 times projected 2026 earnings, while Comcast is a better company than its price/earnings ratio of six suggests.

Even our growth stocks were laggards this year. Our list includes one of the Magnificent Seven, Amazon.com, which has returned just 5.7% in 2025. We're also partial to Visa and Flutter Entertainment, two other growth stocks that have trailed the market.

Berkshire Hathaway has been on the list for many years, but this year we went with Fairfax Financial Holdings, a smaller, faster-growing Canadian insurer and investor with Berkshire-like attributes. There is also SL Green Realty, the leading commercial landlord in Manhattan, and Madison Square Garden Sports, the owner of the New York Knicks and Rangers, which offers a cheap way to play the booming sports industry. Rounding out the list is pharmaceutical turnaround candidate Bristol Myers Squibb, which yields almost 5%.

This can be a humbling exercise, as we found out in 2024, when our picks were well behind the market. We're hopeful for another solid year in 2026.

Amazon.com

Meta Platforms stock surged in 2023. Nvidia soared in 2024. This year belonged to Alphabet. It could be Amazon's turn in 2026 among the Mag Seven in 2026.

Amazon, at around $232, has gained just 6% this year and trades for about 29 times projected 2026 earnings of $8 a share — we're using a conservative estimate that includes stock compensation — a discount to a slower-growing Walmart at 38 times earnings.

Investors are worried about Amazon's $125 billion of capital spending this year, a slowdown at its industry-leading cloud platform Amazon Web Services, and whether it's harnessing AI as well as some Mag Seven peers.

Amazon is spending, but it's getting results. It has a 40%-plus share of U.S. e-commerce, while third-quarter AWS revenue growth of 20% was its fastest in 11 quarters. Its lucrative ad platform is generating $75 billion in revenue, and it has a portfolio of promising newer businesses like pharmaceuticals, satellite-service Amazon Leo, Alexa+, and Zoox, its robo-taxi service.

Evercore ISI analyst Mark Mahaney, who has a $335 price target on Amazon, calls it his "No. 1 large-cap Internet long" idea. He made similar — and correct — calls on Uber a year ago and on Alphabet in the spring, when both were out of favor.

Bristol Myers Squibb

Bristol Myers Squibb could become the pharmaceutical industry's turnaround story for 2026.

The stock, now around $51, is one of the worst performers in a group that has rallied off midyear lows. Shares are off 9% in 2025 after a series of drug pipeline disappointments, while major patent expirations, like one for cancer drug Revlimid, could cause earnings to fall 5% in 2026 and another 5% in 2027.

Bristol, though, trades for just eight times projected 2026 earnings, giving it the lowest P/E ratio in the drug sector, along with Pfizer. It carries a safe dividend yield of 4.9%.

At the current price, investors are paying little for Bristol Myers' pipeline, led by Cobenfy, a schizophrenia drug being tested as a treatment for psychosis among Alzheimer's patients, and Milvexian, a treatment of atrial fibrillation and strokes.

CEO Chris Boerner said on the third-quarter earnings call that he feels "even better" about the outlook given a sales shift away from drugs with patent expirations, the pipeline, and company's financial discipline.

And if that doesn't work, Bristol Myers, with a market cap of just over $100 billion, is small enough that it could become a buyout target.

Comcast

Comcast is among the S&P 500's 10 cheapest stocks based on projected 2026 earnings. It has a safe dividend yield of almost 5%, trades for six times estimated 2026 earnings, and has bought back 5% of its stock over the past 12 months.

Shares, however, are down almost 30%, and at $27 trade below where they did a decade ago because Comcast's cable and broadband business, the largest in the country, has been shrinking slowly. Next year's earnings are expected to fall 3% to $4.13 amid competitive pressure in broadband from telecom companies like AT&T.

CEO and controlling shareholder Brian Roberts has been viewed as an empire builder, but that could be changing. Comcast lost out in the bidding war for Warner Bros. Discovery, but could still separate its valuable media, entertainment, and parks business, which could create $30 billion of value, or $8 a share, argues Wolfe Research's Peter Supino. A smaller spinoff of some cable properties, including CNBC, into a new company, Versant, will occur in early January.

MoffettNathanson analyst Craig Moffett thinks investors are overly pessimistic on broadband. He has a Buy rating and an admittedly optimistic price target of $53 on the stock. Even if the stock gets back to its 52-week high of $40, investors would be happy.

Exxon Mobil

Exxon Mobil is the gold standard in the global energy business — and an update to the company's five-year corporate plan this past week highlighted its strengths. Exxon now sees 13%-plus compound annual growth in earnings per share through 2030 — up from the prior target of about 10%.

This assumes Brent crude averages $65 a barrel in real terms. That could be difficult if oil prices stay weak — Brent is now around $61 — but oil has been an outlier as commodities like gold, silver, and copper have rallied. The long-term oil and gas supply picture looks positive, and global demand is still rising despite growth in renewable energy.

CEO Darren Woods is positioning the company to operate profitably for "decades to come." The stock, now around $120, trades for 16 times projected 2026 earnings and yields 3.4%. Exxon Mobil has raised its dividend for 43 consecutive years, and the payout looks safe even if crude falls to $40 a barrel.

Morgan Stanley analyst Devin McDermott is bullish with a $137 target, citing "peer-leading cash flow and earnings growth" and the company's diversified model, including refining and chemicals.

Fairfax Financial Holdings

Fairfax Financial may be the closest thing to a mini Berkshire Hathaway — and it may be a better bet at this point.

The Toronto-based property and casualty insurer has strong insurance operations, an excellent investment record, and phenomenal long-term performance under founder and chairman Prem Watsa, 75. The company targets 15% annual growth in book value, against what's probably high-single-digit growth at Berkshire. It has a market value of about $40 billion, against Berkshire's $1.1 trillion, which makes it easier to grow.

"This is like investing in Berkshire in 1993," says investor Charlie Frischer.

Its current price/book ratio of 1.5 is in line with Berkshire's, but Frischer says the true figure for Fairfax is closer to a cheaper 1.25 times because some investments are carried below market value. It has an excellent portfolio of Indian investments such as a controlling stake in the Bangalore airport.

Fairfax even partners with a Berkshire alumnus, David Sokol, who was once viewed as a successor to Warren Buffett. Sokol runs a containership business in which Fairfax owns a 43% stake. The stock trades mainly in Canada, and has thinly traded U.S. shares now around $1,750.

Flutter Entertainment

Flutter Entertainment is the global leader in online sports betting, but its stock, at around $215, is down by a third since its August peak amid concerns Kalshi and Polymarket will undermine FanDuel, Flutter's most valuable asset.

Most Wall Street analysts think prediction markets don't threaten the business model of FanDuel, the top U.S. site with a 40%-plus market share. FanDuel could capitalize on that trend with a 50/50 prediction markets joint venture with financial-exchange leader CME Group that rolls out by year-end.

For sports betting, prediction markets aren't competitive with FanDuel in live betting, prop bets — such as bets on individual players in football or basketball — and parlays, which are single bets involving multiple outcomes with potentially big payoffs. Parlays are particularly profitable for FanDuel.

Bullish Macquarie analyst Chad Beynon wrote recently that the selloff is overdone for what he views as a "best in class" operator. He has a price target of $330 on Flutter shares, noting the current valuation is well below historic levels. The stock trades for about 22 times projected 2026 earnings — a reasonable multiple given 40% projected earnings growth in 2026 and 2027.

Madison Square Garden Sports

Sports investing is hotter than ever, with record prices being paid for professional teams. Not so Madison Square Garden Sports, the owner of the New York Knicks and New York Rangers.

The combined value of the Knicks and Rangers is probably over $13 billion. The NBA's Los Angeles Lakers were sold in 2025 at a valuation of $10 billion, and the Knicks are probably worth at least that. The Rangers' estimated value is more than $3 billion. MSG Sports, whose shares trade around $225, is valued at $5.4 billion. The stock is up 30% over the past five years, way behind the market and the increase in private team values.

The stock trades cheaply because CEO James Dolan has ruled out a sale of the company, which is controlled by his family. His attitude is bad corporate governance, but Jon Boyar, president of the Boyar Value Group, says it could spin off one of the teams into a separate company, or sell a partial stake in one or both of the teams to private investors and use the proceeds to repurchase stock. A tax-law change in 2027 will penalize owners of public sports teams, which could pressure the company to consider a sale.

"MSGS is one of the best risk/reward setups in the market today," says Boyar, who values the company at nearly $500 a share.

SL Green Realty

The New York City office market is improving, but you wouldn't know it from looking at shares of SL Green Realty, New York's biggest commercial landlord in Manhattan: The company's stock, at around $44, is down 35% in 2025 and trades near a 52-week low.

The depressed stock price reflects weaker-than-expected guidance for 2026 made recently, as well as ample leverage, but also the impact of Democratic socialist Zohran Mamdani, New York's incoming mayor, who isn't exactly business-friendly. His impact has been negative, but he probably won't destroy the real estate tax base of the city that will fund his social programs.

At its recent investor day, the company highlighted the disconnect between its stock price and asset value, which it puts at more than $70 per share. CEO Marc Holliday termed the situation "absurd" and said the company is priced at no more than the value of the land underneath its buildings.

Evercore ISI analyst Steve Sakwa recently called the valuation "compelling" and pegs SL Green's net asset value at $83 a share, although his price target is $54. If SL Green stays this cheap, activists or private-equity investors could target the company.

Visa

Stablecoins. Buy now, pay later. Pushback on fees. Concerns about these issues — and more — have made Visa stock a laggard in 2025, gaining just 5%.

But no matter the worry, Visa has dodged those challenges and continues to generate some of the most consistent double-digit earnings growth among megacap companies. It has even become a leader in stablecoins, a dollar-backed cryptocurrency that some feared would disrupt it.

"I can count on all my fingers and toes the number of times there have been concerns about the strength of the moat," Matt Stucky, chief equities portfolio manager at Northwestern Mutual Wealth Management, told Barron's in November.

The stock, now around $325, trades for 26 times projected earnings in its fiscal year ending in September 2026, down from an average of 31 times over the past five years. It also has Nvidia-like net margins of about 55%.

Visa sees low-double-digit gains in revenue and earnings in the coming year, and it returns most of its profits to shareholders in stock buybacks — 3% of its shares in the latest fiscal year — and a nearly 1% dividend.

Visa continues to have a long runway for growth as the world moves away from cash to plastic and beyond.

Walt Disney

While Netflix and Paramount Skydance are prepared to pay a stiff price for Warner's movie, TV and streaming business, Disney shares languish despite controlling some of the industry's best assets.

Disney stock, at around $107, was hit after its September-quarter results due to a disappointing experiences segment, which is dominated by Disney World and other parks. The profit outlook, however, looks better, with Disney projecting double-digit earnings growth in the 2026 and 2027 fiscal years, helped by its cruise ship expansion.

The stock is valued at 16 times projected earnings in the fiscal year ending in September. That's too cheap given its "valuable intellectual property and durable demand," according to Wolfe Research analyst Peter Supino, who has a price target of $133.

What's more, Disney has similar total earnings as Netflix, but only half the market value. With Netflix potentially becoming more of a traditional media company if it buys Warner, why buy Netflix at double the valuation to Disney?

Don't overlook CEO Bob Iger, who is due to retire at the end of 2026 after his second tour as Disney's leader. He likely wants to go out on a high note — and that's bullish for the stock.

Write to Andrew Bary at andrew.bary@barrons.com

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