10 Toxic Energy Stocks to Sell Now That the Blue Wave is Here

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Energy stocks have enjoyed a strong rally this year, driven primarily by supply disruptions in the Middle East and the Russia-Ukraine war. The blockage on the Strait of Hormuz has choked around a third of the global crude oil and LNG supplies, pushing prices and margins to multi-year highs.

As a result, the overall energy sector has surged by 40.68% since the beginning of 2026, significantly outperforming the 10.70% gains delivered by the wider market.

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According to an estimate by The New York Times, the 51 large US oil and gas companies have earned more than $130 billion in profits during the six months from April through September this year, compared to less than $47 billion in the same period last year. Refiners also reaped exceptional profits after the 3-2-1 crack spread, ⁠which measures US refinery margins, gained more than 150% during the July-September period, from a year earlier.

That said, while the high prices are a major tailwind for oil and gas companies, they have been a headache for American households, prompting them to vote against President Trump’s Republican Party in the recent midterm elections. Democrats campaigned hard on lowering prices, especially at the gas pump, and voters listened. As a result, Brent crude prices have fallen by almost 17% since the end of October, as investors bet ‌that the power shift could hasten the end of the US-Israeli war with Iran.

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The President himself also acknowledged that the war had played a role in his party’s sweeping defeat, while also stating that he had no immediate plans to strike Iran. Experts now believe that after losing Congress to Democrats, a weakened Trump has greater incentive to seek a deal, and a full-scale assault on Iran now looks less likely.

This could spell bad news for American energy stocks, many of which have soared to record highs this year. At the end of the day, the oil business is cyclical in nature, and the latest political developments are a sign that the ongoing cycle may have seen its peak. While it could still take a while for the Iran war to reach a conclusion, investors need to be mindful that even a modest decline in profits could trigger a significant valuation correction for several major energy operators.

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10 Toxic Energy Stocks to Sell Now That the Blue Wave is Here

Methodology:

To collect data for this article, we used our screeners to identify American energy stocks with a short % of float of at least 6% as of October 30, 2026. To keep our list relevant, we only picked companies with a market cap of more than $5 billion. Decades of academic and quantitative market research show that stocks with high short interest are statistically more likely to underperform the broader market over time. In major empirical studies, portfolios of heavily shorted stocks have historically lagged low-short-interest stocks by roughly 1% to 2% per month on a risk-adjusted basis. However, high short interest does not guarantee a decline, as extreme short positioning also creates the mechanical conditions for violent short squeezes.

10. Viper Energy, Inc. (NASDAQ:VNOM)

Short % of Float: 6.21%

Market Cap: $14.97 Billion

Viper Energy, Inc. (NASDAQ:VNOM) is a pure-play Permian Basin minerals and royalty company, meaning it collects payments from oil production without bearing the costs of drilling and completion associated with those properties. The company is exposed to development activity across a large acreage position, particularly through Diamondback Energy and other major Permian operators.

Viper Energy reported its Q3 2026 results on November 2, beating estimates in both earnings and revenue. Notably, the company reported daily production of 69,000 barrels per day of oil and 141,152 barrels of oil equivalent, up more than 6% sequentially, driven by recent acquisitions and the continued development from both Diamondback and its third-party operators.

As a result, Viper raised its full-year 2026 oil production guidance with a new midpoint of 67,500 barrels of oil per day, compared to a midpoint of 65,500 barrels previously. The combination of production growth and relatively low operating requirements is a compelling part of the company’s investment thesis.

Viper’s ability to generate substantial free cash flow without funding extensive drilling programs allows it to maintain an attractive dividend yield, currently at 5.61%. This puts it in our list of the 10 Energy Stocks with Highest Dividends.

That said, Viper Energy is heavily dependent on Diamondback Energy, and any operational delays by this primary operator would directly reduce royalty revenues. Additionally, the company is highly exposed to energy price swings because it does not hedge its production heavily, making it particularly vulnerable in the current volatile global energy landscape.

9. APA Corporation (NASDAQ:APA)

Short % of Float: 6.95%

Market Cap: $16.13 Billion

APA Corporation (NASDAQ:APA) is an independent exploration and production company that develops and produces crude oil, natural gas, and natural gas liquids.

APA beat top- and bottom-line estimates in its Q3 2026 results on November 4. Revenue surged by 39.35% YoY, while net income attributable to shareholders jumped by over 240. However, much of this improvement came from higher prices rather than increased production.

APA generated $699 million of free cash flow during the third quarter and returned $537 million to shareholders. Notably, the company capitalized on the higher prices to bolster its balance sheet and retired approximately $450 million of debt, ending the quarter with a total debt of $3.3 billion. The energy firm has reduced total debt by $2.8 billion since year-end 2024, lowering annualized interest expense by more than $180 million.

APA also remains focused on operational efficiency and reiterated its target of achieving $500 million in annualized savings by the end of this year.

That said, the company’s production trends deserve attention. APA’s worldwide oil production decreased 13,400 barrels per day (bpd) to 220,900 bpd during the third quarter from the year-ago period, primarily due to the natural production decline in the North Sea and lower production-sharing contract volumes in Egypt. If oil prices normalize, the company could face pressure from both lower realized prices and declining production volumes.

Clough Capital Partners L.P., an investment management company, stated the following regarding APA Corporation in its Q3 2026 investor letter:

“Energy holdings produced mixed results, with APA Corporation among the detractors. This variation reinforces our preference for evaluating individual business models rather than relying exclusively on a sector outlook. Commodity exposure, contractual revenue, investment requirements, and competitive positioning can produce markedly different outcomes within the same industry. Those differences offer room for active selection even when the broader direction of a market remains uncertain.”

APA Corporation ranked 6th on our list of the 12 NASDAQ Stocks to Buy for Dividends. To see which stocks outranked it, click HERE.

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