3 Stocks Positioned to Benefit as Oil Pushes Toward $100

Oil has kept climbing, Brent crude is now trading near $98 a barrel, a fresh six-week high, and that changes everything. While everyone was still betting on rate cuts, three stocks stand to win from this shift, and most investors haven't caught on yet.

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What’s Happening and Why It Matters for Investors

Here’s a quick refresher in case you need it: The US and Israel's war with Iran started February 28th. Since then, Iran and Iran backed groups have carried out well over 150 attacks on energy infrastructure across the Gulf: refineries, gas complexes, export terminals. The Strait of Hormuz, which normally carries about a fifth of the world's oil and gas, has been running well below capacity for months.

The result: Brent crude is up more than 25% since the war started, and it keeps grinding higher with every fresh escalation, including strikes on Saudi Aramco facilities and renewed tension over shipping through Hormuz this week.

Here's the part most investors are underpricing. At the start of the year, the market fully expected the Fed to keep cutting. Instead, Fed Chair Kevin Warsh has kept rates on hold for months, sitting at a target range of 3.50 to 3.75%, because oil driven inflation keeps coming in hot. More than once this year, futures markets have priced in a real chance, at one point a majority chance, of an actual rate hike at an upcoming meeting. That was unthinkable back in January.

So the rate cut trade a lot of portfolios were built around this year is basically dead. And that changes who wins from here.

Let's start with the pick most people won't expect, since it's got almost nothing to do with oil directly, and everything to do with the rate side of this story. That ticker is…

 Mercury General (MCY).

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Mercury General (MCY)

This is the pick most people skip when they're thinking about a war in the Middle East, but insurers are actually one of the cleanest ways to benefit from a higher for longer rate environment.

Here's the mechanism. Insurers collect premiums up front and invest that money before they ever pay out a claim. When rates stay elevated instead of falling, that invested premium, the float, earns more. It's a direct line from the Fed not cutting to this company's investment income going up.

And the latest numbers back that up. Mercury General's most recent quarter beat estimates across the board. Revenue came in at $1.68 billion, up 14% year over year and about 10% ahead of what analysts were modeling.

Operating earnings per share landed near $3.52, roughly 38% above consensus. And the number that matters most for an insurer, the combined ratio, a measure of underwriting profitability where anything under 100% means the insurance business itself is making money, came in at 89.9%, well ahead of the 97.2% analysts expected.

Wall Street coverage here is very thin. That's exactly where Zen Ratings can fill the gap, giving a systematic read on a stock the sell side isn't paying much attention to.

The Zen Ratings review every stock by 115 different fundamental, technical, and AI factors, boiled down into an intuitive letter grade of A through F. The higher the grade, the higher the expected results. Those 115 factors are further compiled into 7 underlying Component Grades so you can see how the stock ranks in key areas like Value, Growth, Momentum and more.

This stock earns a Zen Rating of A, a Strong Buy recommendation, ranking in the top 3% of all stocks in the system.

Digging into the Component Grades: it ranks in the top 22% for Financials, meaning the underlying balance sheet and earnings quality hold up well beyond just this one strong quarter. Even better, top 8% for Sentiment, suggesting the direction of opinion on this stock, thin as coverage is, has been moving firmly positive. And best of all, top 7% for Value, showing that even after its move higher, the stock still trades cheap relative to its own fundamentals and its peer group. On top of all that, top 3% for Artificial Intelligence, meaning the machine learning layer is picking up patterns in the data pointing toward continued strength that go beyond what the traditional factors show on their own.

One risk worth flagging: Safety comes in as the weak link here, sitting right around the middle of the pack. That lines up with the real risk in this business. Mercury writes a lot of auto and home insurance in California, and wildfire seasons can still show up in results well after the fact, the Palisades and Eaton fires were still affecting loss reserves in this most recent quarter.

Still, a middling Safety grade attached to a company that just grew book value per share by 44% is a very different conversation than a middling Safety grade attached to a company that's actually struggling. This one's earning its risk.

Next up is a name everyone already knows, which usually means there's nothing left to find. This time, that's not quite true.

BP (BP)

Next is BP (BP). The story here is about as direct as it gets: a global, integrated oil major that produces, refines, and trades crude worldwide. With Brent grinding higher toward $100, BP's upstream barrels are worth more with every dollar the price climbs.

This isn't just an oil price story, the underlying business is actually turning right now. For years, BP's growth had lagged the rest of the industry. But last quarter, revenue jumped to $70.1 billion, up 31% from the quarter before, and last year's revenue growth actually outpaced BP's own 5 year average. This is the kind of acceleration that tends to show up before the broader market fully catches on. This looks like the start of a turn, not a story that's already priced in.

Coverage on this one is not thin. 10 analysts rate the stock, and the picture is constructive: a majority rate it Buy or Strong Buy, and the overall consensus lands at Buy. The most bullish voice in the room is Paul Cheng at ScotiaBank, who ranks in the top 14% of analysts tracked based on actual stock picking performance. He's maintained his Buy recommendation and sees about 35% upside from current levels.

BP earns a Zen Rating of A, a Strong Buy recommendation, ranking in the top 1% of all stocks in the system.

As you might expect from that top 1% ranking, the Component Grades are solid. It ranks in the top 23% for Value, indicating the stock is still fairly priced relative to peers even after everything oil has done this year. Better still, top 20% for Safety, pointing to a comparatively resilient balance sheet, useful given how sensitive this business is to oil price swings. Better again, top 9% for Momentum, meaning the market's already recognizing the bullish case in the price. And tied at the top, top 5% for both Growth and Sentiment, showing accelerating fundamentals and improving sentiment moving together. And top 1% for Artificial Intelligence, meaning the machine learning layer is picking up patterns in the data pointing toward continued strength on top of everything the traditional factors already show.

One risk worth flagging: the stock's attractive, nearly 5% dividend yield comes with some history. BP's dividend has been cut by more than 10% at least once in the last 10 years, and it hasn't grown consistently over that stretch either. It's currently paying out over 94% of earnings, so there's not a lot of room for error if oil turns the other way.

Even with that caveat, this is a name built for exactly the environment this story is about: direct oil exposure, a rating near the top of the entire system, and Wall Street largely agreeing.

This last one is saved for last on purpose. It's the highest rated stock on this entire list, it's already made an enormous move, and there's a very specific reason the data says it's not done yet.

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Marathon Petroleum (MPC)

Stock number 3, the highest rated name in this entire list: Marathon Petroleum (MPC).

Here's the part most people miss about a supply shock like this one: it doesn't just lift crude prices, it can lift refiner margins even more. Refiners like Marathon buy crude and sell finished products, gasoline, diesel, jet fuel. Their profit is the spread between those two prices, called the crack spread. When strikes hit refineries across the Gulf and squeeze finished fuel supply faster than they squeeze crude supply, that spread can widen, which is exactly what's been happening as Middle East refining capacity keeps getting knocked offline.

The trailing numbers show it. Earnings over the past year came in at $8.6 billion, up more than 300%.

But here's the twist: the stock has already run so far on that. As of this writing, it's up over 40% in just the last 3 months and more than 107% over the past year, such that it's now trading above every analyst price target except two, and the average target across all 13 analysts covering it actually sits below today's price.

The qualitative read is still bullish, the consensus rating is Strong Buy, it's just that price targets haven't caught up to how fast this stock has moved.

That's exactly the kind of moment a tool like Zen Ratings earns its keep. It's not anchored to a target published weeks ago, it's reading the same underlying data fresh, right now.

Marathon Petroleum earns a Zen Rating of A, a Strong Buy recommendation, ranking in the top 1% of all stocks in the system, one of the 10 highest rated names tracked out of more than 4,600.

A quick look at the Component Grades shows why it earns this elite rating. It ranks in the top 17% for Sentiment, meaning that even as price targets lag, the underlying trend in analyst tone has kept moving in a positive direction. Better still, top 9% for Financials, pointing to balance sheet and earnings quality that hold up beyond just one blowout quarter. Better again, top 7% for Value, and it's easy to see why, even after this run, the stock still trades around 13 times earnings. Better again, top 2% for Growth, meaning the fundamentals themselves are genuinely accelerating, not just a story the market's telling itself. And tied at the very top, top 1% for both Momentum and Artificial Intelligence, meaning the price trend and the machine learning layer are both flashing the same signal independently.

Wall Street's own models haven't caught up yet. Consensus estimates actually call for earnings to ease and revenue to flatten out over the next few years, which is a big part of why those price targets look stale against today's price.

Zen Ratings isn't waiting on that debate to resolve. It's reading the data as it comes in, and right now that data still says Strong Buy.

Conclusion

Here's the actual takeaway. There's no guarantee the Fed hikes, and no guarantee this war keeps escalating. Nobody knows that, including the Fed itself. What's clear is that the setup most portfolios were built for this year, one where rates just keep falling, isn't the setup we're in anymore.

Two things worth watching closest from here: any headlines out of the Strait of Hormuz, since a real ceasefire would hit oil prices fast, and the Fed's next meeting, where every fresh escalation, like this week's strikes on Saudi facilities, keeps the door open to a hike that was unthinkable back in January.

Until one of those two things clearly breaks, it makes sense to want exposure on both sides of this trade: direct oil, refining margins, and a rate hike hedge like insurance, instead of betting the whole portfolio on rates going back to zero.

The Zen Rating on any of these, or any other stock, is free to look up at wallstreetzen.com, updated daily.

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