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Energy (XLE) is the winning sector in 2026 with a year-to-date return of 36%, materials (XLB) is in second place at 10.5%, while technology (XLK) falls more than 7%. Only two sectors are performing worse than technology — consumer discretionary and financials. If you look back one year, energy is still in the lead with a 12-month return of 59%, compared to technology at 49%. The question, is will the gains in the energy sector continue, especially if —and hopefully when — the war in the Middle East ends? My thought is they can, despite the ultimatum President Donald Trump put on Iran for 8 p.m. ET. But the idea of the Strait of Hormuz being simply open for business on Wednesday is unlikely. There will be continued supply shortages in the crude oil market leaving inflationary pressures elevated and likely boosting the energy sector. Aside from geopolitical risk premium boosting oil, I think there’s also a rethink of the valuation of energy companies that are considerably undervalued relative to technology companies. Along with the valuation argument, there have been several reminders on the global macro stage that the single most important factor for sovereign nations is to secure an energy source, ideally being self-reliant for energy needs. The move to clean energy and away from fossil fuels will be much further than we had hoped. Looking at the sector weighting of the energy sector compared to the technology sector within the S & P 500 (SPX) , it wasn’t all that far back that the two had equal weightings of about 16% in 2009. Since then, energy dropped down as low as 3%, while technology rocked higher to 38%. (Thanks to Fred Imbert at CNBC for building this chart for me!) When building and managing portfolios for our clients at Inside Edge Capital, I adjust the allocation of our portfolio based on the S & P weighting and then will adjust our holdings based on our outlook for the sector. In our growth portfolio, we’ve been increasing our allocation to energy up to 10% from a 2% weighting in December. In our equity income portfolio, we went from 6% in December to 14% in the March rebalance. Looking at the long-term chart of State Street Energy Select Sector SPDR ETF (XLE) , you’ll see energy recently broke out after a 3+ year consolidation. We’re traveling this week for Easter and typing this article at the pool bar — with a Celsius (CELH) in hand — all eyes are on Trump’s ultimatum to Iran tonight, which will surely bring market volatility. In anticipation of tonight’s deadline, I’m examining our portfolios and running scans to review our holdings. One scan brought up an energy name we are holding that I think is still actionable at current levels: Sector: Energy Market cap: > $2B Dividend yield for CY 2025 between 1.5% – 9% Dividend CAGR from 2018-2025 > 6% Payout ratio: 2026 < 65X Revenues: CAGR from 2023- to 2025 > 5% Net EPS: CAGR from 2023 to 2025 > 7% Gross margin: 2025 > 20% Trailing EV/EBITDA 2025 < 16X The stock is Archrock (AROC ). The company has a complicated history, as it holds legacy assets from Exterran Holdings and a multiyear period operating in a master limited partnership structure. In 2018, the company went through a merger that shaped the company as we know it today. AROC is one of the largest natural gas compression companies in the U.S., a critical but often overlooked part of the energy value chain. Natural gas production continues to grow driven by LNG exports, power demand and AI-driven data center energy needs. So this company is getting a bid from both the global macro risk premium, as well as the evolving technology sector driven by AI. The company is generating strong and improving cash flow, supported by high utilization rates across its compression fleet and disciplined capital spending. This has driven impressive EPS growth rates in the last 3 years of 166%, 51.4% and 68.1% — impressive for a company that also pays a 2.6% dividend. Technically speaking, the stock has pulled back to the 50-day moving average and well above the early 2025 resistance-turned-support level of $30.44. We hold the name at 1% allocation in our growth portfolio at Inside Edge Capital and am looking to increase the allocation to as high as 3% on our next rebalance. — Todd Gordon, Founder of Inside Edge Capital, LLC We offer active portfolio management and financial planning for retail investors, as well as regular market updates at www.InsideEdgeCapital.com DISCLOSURES: Todd owns AROC and CELH personally and for clients in his wealth management company Inside Edge Capital, LLC. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. 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