Three energy stocks look like bargains as the Iran conflict drags on

By Philip van Doorn

Most of the 2026 gains in the S&P 500 energy sector came before the U.S. and Israel attacked Iran. Meanwhile, stock prices are pulling back in one corner of the oil and natural-gas industry.

Shares of oil services and equipment companies have declined since the U.S. and Israel attacked Iran on Feb. 28, even as oil prices have soared more than 50%.

When a military conflict is disrupting a large part of the world and stifling the flow of oil, it can be difficult for investors to think about the long term. But you might be surprised at the action for stock prices in the S&P 500 energy sector since the U.S. and Israel began their attacks against Iran on Feb. 28. And a particular group of oil-industry stocks has been moving lower, setting up increasingly attractive buying opportunities for patient investors.

Early on Monday, continuous front-month contracts for West Texas Intermediate crude oil (CL00) were trading at $103.27 a barrel, up 13.6% for the session and up 54% from a settlement price of $67.02 on Feb. 27.

But the State Street Energy Select Sector SPDR exchange-traded fund XLE was down slightly early on Monday, and it was up only 1.1% from Feb. 27.

Then again, XLE, which tracks the S&P 500 energy sector by holding all 22 stocks weighted by market capitalization, had risen 25.1% for 2026 through Feb. 27, before the attack on Iran. Investors in the stock market had been looking ahead.

All price changes in this article exclude dividends.

Monday market action:

-- G-7 hasn't yet agreed on deploying unprecedented oil reserves as prices soar

-- Spiking oil prices basically end any chance of a market 'melt-up,' says this Wall Street veteran

-- Oil prices are the No. 1 thing investors are watching right now. Here's why.

The largest integrated oil companies in the S&P 500 SPX are expensive on a forward price/earnings basis, relative to five- and 10-year average valuations. These are prices divided by rolling consensus 12-month earnings-per-share estimates among analysts polled by LSEG.

-- Exxon Mobil XOM was up 0.9% early Monday. The stock was flat from its close on Feb. 27 but up 26.8% for 2026. The stock's forward P/E ratio was 21.7, compared with a five-year average forward P/E of 15.1 and a 10-year average of 18, with both averages through March 6, according to LSEG data.

-- Chevron CVX was up slightly Monday morning. The stock was up 1.9% from the close on Feb. 27 and up 24.8% for 2026. Chevron's forward P/E was 26.5, compared with a five-year average valuation of 16.8 and a 10-year average forward P/E of 23.2.

In his Market Strategy Radar Screen on Sunday, Oppenheimer Asset Management's chief investment strategist John Stoltzfus reiterated his positive outlook for the stock market in 2026 and wrote: "We suggest intermediate- and longer-term investors look for 'babies that get thrown out with the bath water' in market downdrafts that may occur."

So how about those bargains? It turns out that based on prices early Monday and the latest consensus EPS estimates, the three companies specializing in oil services and equipment in the S&P 500 energy sector were all trading at low forward P/Es relative to their averages:

Here they are, sorted by ascending intraday forward P/E early Monday:

   Company          Intraday forward P/E on March 9  Five-year average forward P/E through March 6  10-year average forward P/E through March 6  Price change since Feb. 27  2026 price change 
   Halliburton                                 14.7                                           15.5                                         22.1                       -5.6%              20.2% 
   SLB                                         15.2                                           18.5                                         23.9                      -10.7%              19.5% 
   Baker Hughes                                21.6                                           22.3                                         33.2                       -9.2%              30.1% 
                                                                                                                                                                                  Source: LSEG 

Click on the tickers for more about each company.

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-Philip van Doorn

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03-09-26 1202ET