3 Energy Stocks Down 35% From Their Highs to Buy in 2026

Industry Overview - The Oil/Energy sector faced significant challenges in 2025, with oil prices remaining under pressure and the sector lagging behind the broader market, which saw the S&P 500 increase by approximately 20% [1][3] - Crude oil prices fell below $60 per barrel, representing a decline of about 20% for the year, driven by oversupply concerns and a lack of strong upward momentum [3] Market Sentiment - Negative sentiment in the energy sector led to many equities falling out of favor, despite some companies performing well [5] - Stocks trading at least 35% below their highs can attract investor interest, particularly when the declines are driven by macroeconomic factors rather than company-specific issues [6][7] Investment Opportunities - Historical patterns suggest that periods of deep pessimism can create opportunities for contrarian investors looking ahead to potential recoveries in 2026 [1][5] - Companies like Drilling Tools International (DTI), KLX Energy Services Holdings (KLXE), and W&T Offshore (WTI) are highlighted as potential investment opportunities due to their strong fundamentals despite significant stock price declines [2][9][14] Company Highlights - Drilling Tools International (DTI): Specializes in downhole tools and has a projected earnings growth of 650% for 2026, with its stock trading 38% below its 2025 highs [8][11] - KLX Energy Services Holdings (KLXE): Provides a range of services to onshore oil and gas producers and is positioned for a 14.5% earnings growth in 2026, with shares nearly 80% off their peak [12][14] - W&T Offshore (WTI): An independent oil and natural gas producer with a strong cash flow and a drilling success rate near 90%, its stock remains over 35% below its October peak [15][17]