14 Best Oil and Gas Stocks to Buy According to Hedge Funds

11. Phillips 66 (NYSE:PSX)

Number of Hedge Fund Holders: 64

Phillips 66 (NYSE:PSX) is a diversified and integrated downstream energy provider that manufactures, transports, and markets products.

On May 27, Mizuho analyst Nitin Kumar upgraded Phillips 66 (NYSE:PSX) from ‘Neutral’ to ‘Outperform’, while also raising the firm’s price target on the stock from $170 to $212. The revised target indicates an upside of more than 20% from the current price level.

The upgrade was driven by Phillips 66’s improving refining operations, successful execution of strategic initiatives, and greater exposure to the rising refining and chemicals margins. Moreover, Mizuho cited the company’s “enhanced” earnings outlook for the price target boost.

Phillips 66 (NYSE:PSX) delivered a surprise adjusted profit of $0.49 per share and topped estimates by $0.88 in its Q1 2026 report last month. The strong performance was driven by a sharp rise in refining margins and higher capacity utilization, which helped the company offset the ​impact of volatile commodity prices. US refining margins, measured by the 3-2-1 crack spread, surged by around 73% YoY on average during the first quarter.

Oakmark Select Fund stated the following regarding Phillips 66 (NYSE:PSX) in its Q1 2026 investor letter:

“Phillips 66 (NYSE:PSX) was the top contributor during the quarter. The U.S.-headquartered downstream energy company’s stock price rose as it benefited from higher crack spreads (the difference in price between crude oil and refined petroleum), heightened geopolitical risk and solid fourth-quarter 2025 earnings. Fundamental results have been encouraging, and we believe PSX is set to be a major beneficiary of rising crack spreads. We continue to see PSX as a durably advantaged energy company focused on returning cash flow to shareholders.”