Energy stocks have been on a tear since geopolitical tensions flared in the Strait of Hormuz, but according to Goldman Sachs, the real opportunity might just be getting started. The bank argues that higher oil price forecasts are resetting the valuation floor for the sector, leaving a select group of companies with meaningful upside from today's levels.

In a move that signals a more bullish long-term view, Goldman upgraded its oil price forecasts across the board on Sunday. The bank now expects Brent crude to average about $80, $100, $90, and $80 per barrel across the four quarters of 2026. That's up from prior estimates of $75, $85, $70, and $70, respectively. Perhaps more importantly for valuing energy companies, Goldman also raised its normalized Brent assumption for 2027 from $70 to $75 per barrel. Think of that as the new conservative baseline they're using to judge these stocks.

So, Which Stocks Make the Cut?

Goldman's analysis points to seven winners, anchored by four Permian-focused exploration and production companies. This group offers an average total return of about 22%, according to the report.

Neil Mehta, head of Americas energy equity research at Goldman Sachs, highlighted Permian Resources Corp. (PR) in a Sunday note. The stock stands out on yield, trading at a 16% average free cash flow yield on 2027/2028 estimates at that $75/bbl Brent price, versus an E&P peer average of 11%. Goldman raised its price target to $23 from $22, implying a 15% upside from last Friday's closing price.

The title for largest potential percentage gain, however, goes to Viper Energy Inc. (VNOM). Viper has a neat business model: it collects royalties from Permian production but doesn't spend a dime on capital expenditures. This no-capex mineral royalty model compresses its cost structure and amplifies margins compared to operating E&Ps. Goldman sees 29% upside and a 37% total return, raising its target from $59 to $61.

Diamondback Energy Inc. (FANG), which happens to be Viper's parent company, also makes the list with a raised $216 target. Goldman estimates it will have a 12% average free cash flow yield on 2027/2028 estimates, versus a large-cap peer average of 10%.

Ovintiv Inc. (OVV) rounds out the four E&P buys with a $66 target. The company has a pending $3.0 billion divestiture of Anadarko assets that is expected to further reduce its net debt, a move that typically pleases investors.

Shifting to the Majors—the big integrated oil companies—Goldman's highest-conviction name is ConocoPhillips (COP), which sits on the bank's US Conviction List. Mehta's team projects a 20–25% compound annual growth rate in free cash flow per share through 2030. They see this growth driven by four major projects (NFE, NFS, Port Arthur, and Willow) alongside approximately $1 billion in cost reductions.

Chevron Corp. (CVX) carries a $217 target and an estimated 10% total return. The thesis is underpinned by the company's guidance for an annual cash flow profile of $28–$30 billion by the end of the decade (at $70/bbl Brent) and approximately $15 billion in share repurchases through 2028.

Finally, among Canadian oils, Cenovus Energy Inc. (CVE) leads with an estimated 25% total return. A key catalyst is the West White Rose project, which is approaching first oil by the end of the second quarter of 2026.