Piper Sandler Says These 3 Energy Stocks Are Top Picks for 2026

While the oil market can vary, much of that volatility tends to float on the surface – like oil on water. Underneath it, long-term trends – the currents in the water – are churning in the depths.Claim 70% Off TipRanks This Holiday SeasonUnlock hedge fund-level data and powerful investing tools for smarter, sharper decisions Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential Prices for hydrocarbon energy sources are tending downwards right now, facing pressures from a glut in global supplies, rising inventories, and lower-than-expected demand. The result: expectations of lower prices in 2026. Mark Lear, energy expert from Piper Sandler, has been watching the situation carefully in an effort to predict what's coming down the pike. Laying out his position, Lear writes, "Energy isn't going out quietly in FY25 with oil finally breaking down to fresh four-year lows… Looking to FY26, we see a light at the end of the tunnel for oil with the commodity trading well below our view on mid-cycle, where gas has been more of a consensus long on secular demand expectations despite cyclical risks and a strip that was recently well above our view of mid-cycle. That said, for a group where equity performance has been more dictated by investor positioning than valuation or other fundamental drivers, we ultimately think the near-term opportunity is likely skewed in the favor of gas equity vs. oil, mainly given the magnitude of the gas pullback and the fact that winter has barely begun." Following from this stance, Lear has chosen a few energy stocks as 'top picks' for the coming year. We've opened up the TipRanks platform to explore how Wall Street is viewing three of them. Diamondback Energy (FANG) We'll start with a major player in the North American oil and gas industry, Diamondback Energy. This company, founded in 2007, has extensive holdings in the West Texas Permian Basin and boasts a $42 billion-plus market cap. Diamondback is based in Midland, Texas. A look at the company's holdings shows that most of Diamondback's operations are located in the Wolfcamp, Spraberry, and Bone Spring formations in the Permian Basin of West Texas. The company focuses on acquiring, developing, and exploiting unconventional, onshore oil and natural gas reserves. It makes extensive use of horizontal drilling technology in its activities. Diamondback is known as an independent oil and natural gas company, and in addition to horizontal drilling, it also uses hydraulic fracturing, among other methods. Diamondback is one of the leading players working in the hydrocarbon-rich Permian Basin. Diamondback's operations generate significant revenue and earnings. In the last reported quarter, 3Q25, the company had a top line of $3.92 billion. This figure was up an impressive 48% from the prior-year period, and it beat estimates by $394.3 million. At its bottom line, Diamondback's non-GAAP EPS of $3.08 was 14 cents per share better than expected. The company paid a $1 per share dividend on November 20. The annualized rate of $4 per common share gives a forward yield of 2.7%. In addition to its dividend policy, Diamondback has an active share repurchase policy. Earlier this month, it announced that it had entered into an agreement with its largest shareholder, SGF FANG Holdings, for the repurchase of up to 3 million shares. The agreement is expected to be supportive of the share price going forward. For Piper Sandler's Mark Lear, the important point here is Diamondback's strong position and clear path to continued profits. He writes, "FANG is our top large cap E&P given its position as the low-cost operator in the Permian, long runway of low breakeven projects, consistent execution and line of sight on further efficiency improvements. The company has consistently delivered the strongest asset level performance despite having long ago shifted to full stack development, while we see the company driving the lowest strip reinvestment rate of its oil & gas peers demonstrating the low-cost nature of its asset base. The recent repurchase agreement with the Stephens family removes the risk of a secondary offering weighing on the stock." These comments back up Lear's Overweight (Buy) rating on the stock, while his $219 price target points toward a 50% upside in the coming year. (To watch Lear's track record, click here.) This stock's Strong Buy consensus rating is based on 21 recent analyst reviews, that include 20 Buys and 1 Hold. The stock is priced at $146.31 and its $179.65 average target price implies a ~23% gain on the one-year horizon. (See FANG stock forecast)