The Bad Placeundefined | The chart on this little-known natural gas stock points to even more gains ahead
Energy has been the standout sector in 2026, with the Energy Select Sector SPDR (XLE) posting a 36 % year‑to‑date gain, far outpacing the 10.5 % rise in Materials and the more than 7 % decline in Technology. Over the past 12 months energy still leads with a 59 % return versus 49 % for tech, a performance the author attributes to lingering supply shortages in crude oil, heightened inflationary pressures and a premium placed on geopolitical risk—particularly the ongoing war in the Middle East and President Trump’s ultimatum to Iran. In addition, energy stocks appear undervalued relative to their tech peers; the S&P 500 weighting of energy has slipped from roughly 16 % in 2009 to as low as 3 %, while technology now occupies about 38 % of the index, suggesting a valuation reset in the energy space.
At Inside Edge Capital the author’s team has been actively reshaping portfolio exposures to reflect this shift. The growth portfolio’s energy allocation has risen from 2 % in December to 10 %, and the equity‑income portfolio has moved from 6 % to 14 % after the March rebalance. The breakout of XLE after a three‑year consolidation reinforces the bullish outlook. One particular name the firm is holding—and recommends for further allocation—is Archrock (AROC), a leading U.S. natural‑gas compression company. AROC’s fundamentals are compelling: market cap over $2 billion, dividend yield projected between 1.5 % and 9 % for 2025, dividend CAGR of over 6 % (2018‑2025), payout ratio under 65 % in 2026, revenue CAGR >5 % (2023‑2025), net EPS CAGR >7 % (2023‑2025), and a trailing EV/EBITDA under 16 ×. The firm’s cash flow is strong, utilization rates are high, and disciplined capital spending has driven EPS growth of 166 %, 51.4 % and 68.1 % over the last three years, while still paying a 2.6 % dividend.
Technically, AROC has pulled back to its 50‑day moving average and is trading well above the early‑2025 resistance‑turned‑support level of $30.44, positioning it for upside as the sector benefits from both macro‑risk premiums and AI‑driven demand for data‑center power. Inside Edge Capital currently holds AROC at a 1 % weight in its growth portfolio and plans to lift that to up to 3 % on the next rebalance. The author discloses personal and client ownership of AROC and CELH and notes that all views are his own, not those of CNBC. He emphasizes that the content is for informational purposes only and should not be taken as personalized financial advice.
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