The oil and gas sector enjoyed a stellar run at the stock market last year, with the robustness in prices. One of the top exchange-traded-fund in the space, the Energy Select Sector SPDR shot up 57% in value last year. Though the sector has cooled off recently, energy stocks will likely notch up another solid year of gains.

Oil slipped below $100 a barrel in the past few months while natural prices dropped following an unexpectedly warm winter. Naturally, the oil and gas sector has taken a breather, with XLE stock down over 5% in the past few months, which marks an excellent entry point for investors to wager on energy stocks. Inflation is unlikely to play spoilsport, so it’s best to invest in some of the best energy stocks now.

ExxonMobil (XOM)

ExxonMobil (NYSE:XOM) had a blowout in 2022, posting record profits of $56 billion. That represented a massive 142% bump from last year’s earnings, setting an all-time high for profits among the top U.S. energy stocks. Furthermore, XOM’s effective cost-cutting strategies bore fruit during the pandemic, helping the firm post monster earnings once the market recovered. Operating expenses for the firm were down 14% in 2020 compared to the previous year.

Moreover, ExxonMobil spent a mighty $30 billion on dividends and stock buybacks last year while boosting its capital expenditures by 37% on a year-over-year basis to $22.7 billion. Additionally, with dividend growth of 20 consecutive years, it’s on its way to joining the elusive dividend aristocrat list.

Chevron (CVX)

Chevron (NYSE:CVX) is one of the leading oil majors who have been an excellent wealth compounder. The energy stock racked up record-high profits last year and effectively passed the majority of the windfall to its shareholders. Consequently, Its hedge fund holdings have improved by over 220% from Dec. 2021 to March 2022.

Most recently, Chevron bumped its dividend payout by 6% to $1.50 per share beginning in March. Moreover, it announced a new $75 billion stock-buyback program coming into effect on the 1^st of April, which follows the $25 billion plan it announced in 2019. Additionally, the energy stock giant will repurchase stock at a rate of $17.5 billion beginning in the second quarter, a 17% bump from the previous target. Its stellar dividend hikes and buybacks have been made possible by its exceptional free cash flow performance topping $12 billion.

Valero Energy (VLO)

Valero Energy (NYSE:VLO remains a giant in the refinery space, which has allowed them to become a leader in global energy. It is an international powerhouse in the sector, with refineries covering North America to the U.K.

The pandemic years were remarkably challenging for Valero, but with the robustness in the energy markets last year, the firm has been growing at an impressive pace. The firm benefits from higher commodity prices and the supply imbalance with the scarcity in demand caused by the pandemic. Moreover, refining has become remarkably scarce, with government regulations making it nearly impossible to develop new refineries.

Consequently, Valero’s revenue growth on a year-over-year basis is up 52.5%, with an eye-catching 137% increase in EBITDA growth. Additionally, refining margins are expected to remain high in 2023, with the Energy Information Administration (EIA) predicting refining margins will remain higher than normal through 2023.

Suncor Energy (SU)

Suncor Energy (NYSE:SU) is a Calgary-based Canadian hydrocarbon specialist which produces synthetic crude from oil sands. It operates a high-growth business, generating more than 14% revenue growth in the past five years. Moreover, it has scaled its business efficiently, generating over 170% growth in EBITDA margins.

In its most recent quarter, Suncor reported a 76% bump in profitability to $2.01 billion while announcing an 11% increase in quarterly dividends to 38 cents per share. Also, its crude oil production totaled 440,000 barrels daily, with a refinery utilization rate of over 90% for the quarter. On top of that, it boasts a safe high-yielding dividend stock to invest in, which features a forward yield of 4.7% with a payout ratio of just 28.1%, offering a healthy wiggle room for expansion ahead.

NuScale Power (SMR)

NuScale Power (NYSE:SMR) is an interesting energy stock that remains speculative for now but has the potential to blow up in the future. With geopolitical tensions worldwide, energy independence has never been more relevant. Hence some of the most controversial investment options, such as nuclear energy plays, will likely gain big.

The industry has had a patchy track record of project delays and cost overruns, which is where NuScale’s small modular reactors (SMRs) hold promise.SMRs can be factory-built in a single location and shipped and operated at a different site. Furthermore, despite their smaller size compared to conventional reactors, they can be interconnected in a series to produce a total power output of 500 megawatts or beyond. SMR stock is trading for just $10 now, and it wouldn’t hurt to load up on it for its moonshot potential.

Alliance Resource Partners (ARLP)

Alliance Resource Partners (NASDAQ:ARLP) is an Oklahoma-based company that has become the second-largest coal producer in the eastern U.S.  Furthermore, the firm generates operational income from the production and marketing of coal and royalties from its energy interests. It wrapped up 2022 with considerable aplomb, generating record sales of $2.4 billion with a net income of $577.2 million, representing a 53% and 224% increase from the prior year. Moreover, it expects 2023 coal sales volumes to be priced above 2022 per ton levels with sales volumes and 94%.

Furthermore, with a robust dividend yield of over 13.5%, its stock trades at under one times forward sales estimates, more than 30% lower than the sector average. Hence, ARLP stock remains a highly attractive bet at this point.

Occidental Petroleum (OXY)

Occidental Petroleum (NYSE:OXY) is a diversified energy giant among the most popular Warren Buffett stocks to invest in. Its fully-integrated business model focuses on oil and gas production and basic materials, including polymers, special chemicals, and petrochemicals. Over the years, it’s been a highly consistent business, with over 25% growth in its 5-year average revenue growth. Also, it has returned investors over 83% over the past three years.

Buffet’s holding company Berkshire Hathaway gained approval to buy up to 50% of OXY stock from the Federal Energy Regulatory Commission last year. It now owns 278.2 million company shares, representing 28% ownership, worth over $12.5 billion. According to the company management, as long as domestic oil prices hover above the $40 mark, OXY can sustain its current dividend.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.