After a challenging 2024, the energy sector could be gearing up for a recovery in 2025. The Energy Select Sector SPDR Fund, which tracks energy stocks within the S&P 500, delivered a mere 2% return last year, falling well short of the broader S&P 500’s impressive 23% gain. This underperformance was primarily due to stagnant oil prices, which started the year strong but ultimately returned to near their starting levels, dampening investor sentiment.

As the industry seeks to rebound, investors could consider investing in fundamentally sound oilfield services stocks like TechnipFMC plc (FTI), Subsea 7 S.A. (SUBCY), and ChampionX Corporation (CHX), poised for potential growth.

Geopolitical uncertainty kept oil markets on edge in 2024, with Brent crude prices averaging $80 per barrel but occasionally dipping into the low $70s. This year, Goldman Sachs Research forecasts Brent to trade between $70 and $85 per barrel, averaging $76.

Supply levels in non-OPEC countries and ongoing geopolitical developments, such as sanctions and tariffs, are expected to influence market trends. Meanwhile, long-term demand for oil is expected to climb, driven by rising GDP and increasing transportation needs in emerging markets.

In addition, the International Energy Agency (IEA) recently revised its global oil demand growth forecast for 2025, raising it to 1.1 million barrels per day (bpd) thanks to China’s stimulus measures and strong economic activity in Asia. On the supply side, non-OPEC+ nations are expected to increase production by about 1.5 million bpd, led by countries like the United States, Brazil, and Guyana.

Given this backdrop, let’s look at the fundamentals of the above-mentioned Energy – Services picks in detail:

Stock #3: TechnipFMC plc (FTI)

FTI provides technology and solutions to both traditional and new energy industries, delivering fully integrated projects, products, and services worldwide. It operates through two segments: Subsea and Surface Technologies, driving innovation and efficiency in energy production and delivery.

On November 14, 2024, the company was awarded a major integrated engineering, procurement, construction, and installation (iEPCI™) contract by TotalEnergies for its GranMorgu project on Block 58, the first oil and gas development offshore in Suriname.

The same month, FTI signed a collaboration agreement with Prysmian to accelerate the global development of floating offshore wind to help meet the growing demand for renewable electricity. The combined competencies of the companies will provide unique capabilities to pioneer a complete water column solution, from seabed to ocean surface.

FTI’s revenue increased 14.2% year-over-year to $2.35 billion during the third quarter that ended September 30, 2024. Its income before income taxes grew 140.6% from the year-ago value to $272.40 million. The company’s adjusted EBITDA of $386.10 million indicates an increase of 62.6% from the prior year’s quarter.

In addition, the company’s adjusted net income came in at $280.50 million, up 195.6% year-over-year, while adjusted EPS rose 204.8% from the prior-year quarter to $0.64, respectively.

The consensus revenue estimate of $2.30 billion for the fiscal fourth quarter (ended December 2024) represents a 10.7% increase year-over-year. The consensus EPS estimate of $0.36 for the to-be-reported quarter indicates a 155.2% improvement year-over-year. The company has an excellent surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.

Over the past year, the stock has gained 74.2%, closing the last trading session at $32.24.

FTI’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

FTI has a B grade for Growth, Sentiment, and Quality. It is ranked #13 out of 53 stocks in the Energy – Services industry. Click here to see the additional ratings for FTI (Value, Momentum, and Stability).

Stock #2: ChampionX Corporation (CHX)

CHX provides chemistry solutions, artificial lift systems, engineered equipment, and technologies worldwide to oil and gas companies. It operates through four segments: Production Chemical Technologies; Production & Automation Technologies; Drilling Technologies; and Reservoir Chemical Technologies.

On November 15, 2024, CHX declared a quarterly dividend of $0.095 per share on the company’s common stock, payable to its shareholders on January 31, 2025. The company’s four-year average yield is 0.67%, while its annual dividend of $0.38 translates to a 1.39% yield at current prices.

In July, CHX acquired RMSpumptools Limited, a designer and manufacturer of advanced mechanical and electrical solutions for complex artificial lift applications. This acquisition enhances CHX’s portfolio, enabling it to expand its opportunities in international markets, including the Middle East, Latin America, and global offshore projects, while ensuring high customer service.

For the third quarter that ended on September 30, 2024, CHX’s total revenue stood at $906.53 million, while the company’s Production & Automation Technologies segment reported revenue of $275.70 million, indicating a 7.6% growth from the prior-year period. Its gross profit increased 2% year-over-year to $297.77 million. CHX’s attributable net income amounted to $72.01 million, while its adjusted earnings per share came at par with the year-ago value of $0.44.

Street expects SUBCY’s EPS for the fiscal fourth quarter (ended December 31, 2024) to increase 12.3% year-over-year to $0.49. Its revenue for the same period is expected to come in at $942.11 million. For the fiscal year 2025, its EPS and revenue is expected to register a year-over-year growth of 15.5% and 4.5%, respectively.

The stock has gained 6.7% over the past year to close the last trading session at $28.16.

CHX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.

CHX also has a B grade for Quality and is ranked #10 out of 53 stocks in the same industry. Beyond what is stated above, we’ve also rated CHX for Growth, Value, Momentum, Stability, and Sentiment. Get all CHX ratings here.

Stock #1: Subsea 7 S.A. (SUBCY)

Headquartered in Luxembourg, SUBCY delivers offshore projects and services for the energy industry globally. It offers subsea field development products and services, like project management, design, and engineering. It also provides engineering, procurement, commissioning, and installation of subsea umbilicals, risers, and flowlines.

On January 9, 2025, SUBCY secured a front-end engineering and design (FEED) contract by Equinor for the Fram Sør development project offshore Norway, with an option for EPCI work. The study, beginning immediately in Norway and the UK, will refine the subsea design ahead of Equinor’s final investment decision.

If the EPCI option is exercised, the company will handle SURF installation, with offshore activities planned for 2026-2028. This early involvement positions SUBCY to optimize solutions and shape project outcomes.

On December 30, 2024, SUBCY was awarded a large contract by Turkish Petroleum Offshore Technology Center AS to provide inspection, repair, and maintenance (IRM) services for the Sakarya field development in the Black Sea, offshore Türkiye.

The collaboration aligns well with SUBCY’s operations, allowing it to explore the full potential of the Sakarya gas field and strengthen its long-term presence in Türkiye.

For the third quarter that ended September 30, 2024, SUBCY’s revenue increased 16.2% year-over-year to $1.83 billion, and its gross profit rose 76.8% from the year-ago value to $226.10 million. The company’s net income and EPS came in at $98 million and $0.31, up 172.2% and 181.8% from the prior year’s quarter, respectively. In addition, its adjusted EBITDA increased 59.7% from the year-ago value to $321 million.

As per the company’s full-year 2024 outlook, SUBCY expects revenue between $6.50 billion and $6.80 billion, and its adjusted EBITDA is expected to range from $1.03 billion to $1.08 billion.

Analysts expect SUBCY’s revenue for the fourth quarter (ended December 2024) to increase 9.8% year-over-year to $1.79 billion. The company’s revenue for the fiscal year 2025 is expected to grow 6.2% year-over-year to $7.15 billion. Moreover, the company topped the consensus revenue estimates in three of the trailing four quarters.

SUBCY’s stock has surged 11.9% over the past month and 20.4% over the past year to close the last trading session at $17.23.

SUBCY’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

SUBCY has an A grade for Growth and a B for Stability and Sentiment. It is ranked #9 among 53 stocks in the Energy – Services industry.

To access SUBCY’s other ratings for Value, Momentum, and Quality, click here.

What To Do Next?

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FTI shares . Year-to-date, FTI has gained 11.40%, versus a -0.80% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

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