The energy sector is home to companies with high brand recognition, with Chevron and ExxonMobil among the leaders. Experienced investors can likely rattle off several other energy stocks, including large-cap oilfield services providers and midstream operators with juicy dividends.
However, the sector is also littered with companies that are arguably anonymous, occupying niche interests that may also spell big opportunities for savvy market participants.
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Take the case of Select Water Solutions (NYSE: WTTR), a company that has plenty of the hallmarks of an under-the-radar stock. With a market capitalization of just $2.3 billion, Select Water is a mid-cap stock, and that alone suggests it may be overlooked. Add to that, just five sell-side analysts cover this stock. That’s just 20% of the analyst population tracking Chevron.
Yet, even with all those factors, Select Water’s share price is up nearly 65% year to date, and it may not be done.
When necessity and opportunity meet…
Many seasoned investors may be able to rattle off some companies producing oil and gas in various U.S. shale regions, such as the Bakken and the Permian Basin. Some may even be able to name a few service providers, but Select Water is even further behind the scenes.
Put simply, this Texas-based company provides water disposal, transport, and treatment services to shale drillers, and that’s a vital function because fracking is a water-intensive endeavor. A decade ago, a single well in the Permian Basin needed 11 million gallons of water per day to function. Obviously, that’s a massive demand.
It’s not only the built-in demand that bodes well for Select Water. First, not all water sources are convenient to shale wells, so someone has to move the H2O from the source to the shale. That demand is likely one reason why first-quarter margins and revenue in Select Water’s water services segment increased at impressive paces.
Second, water isn’t an infinite resource, and the excess that’s run through shale wells needs to be properly treated and disposed of. These aren’t glamorous businesses, but Select Water executes in these areas with high aptitude, as shown by a 19.2% sequential increase in water infrastructure revenue coupled with a margin increase of 210 basis points in the first quarter.
Hit the Select button
By no means is Select Water a traditional water stock, but it’s not the run-of-the-mill oil stock, either. In fact, the water infrastructure company may be protected against a dramatic decline in oil prices, as the average break-even price for many shale producers is $60 to $65 per barrel, well below the $81.50 level seen on May 11.
Further support for the Select Water thesis comes from its $56 million in cash on hand at the end of the first quarter. That doesn’t sound like much, but it’s more than triple the amount the company had at the end of 2025, indicating the balance sheet is trending in the right direction.
Speaking of things heading in the right direction, Select Water is bringing new projects in the current quarter and the next one. At the same time, guidance for the water infrastructure business was boosted by 25% to 30%, indicating this stock has the potential to deliver more upside.
Should you buy stock in Select Water Solutions right now?
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Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.
This Under-the-Radar Energy Stock Could Be the Best Buy of 2026 was originally published by The Motley Fool
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
