2 Defensive Stocks That Wall Street Loves for the Oil Shock Playbook

Amid the oil price shock triggered by the war in the Middle East, many investors are likely looking for good defensive stocks to choose from. Utility stocks should be high on investors' lists, since these names have performed well following oil price shocks in the past. Many utilities also benefit from growing demand for electricity and the relatively rapid increase in electricity prices that has been spurred by data centers.

In particular, two companies that could enable investors to benefit from these trends are Vistra (VST), an electrical utility, and Xcel Energy (XEL), which provides electricity and natural gas to millions of customers. Against a backdrop of geopolitical uncertainty and surging electricity demand, along with reasonable valuations and positive views from Wall Street, VST stock and XEL stock are buys for investors looking for defensive, growth-at-a-reasonable-price (GARP) equities. 

About Vistra Stock

Vistra describes itself as “one of the largest competitive power generators in the U.S., with a capacity of approximately 44,000 megawatts, or enough to power 22 million homes.” In the fourth quarter of 2025, adjusted EBITDA from ongoing operations fell to $1.74 billion from $1.98 billion during the prior-year period. However, Vistra guided for 2026 adjusted EBITDA from ongoing operations between $6.8 billion to $7.6 billion. That is well above the $5.9 billion the firm saw in fiscal 2025.

VST stock changes hands at a trailing price-to-earnings (P/E) ratio of 31.5 times and a forward P/E ratio of 19.3 times. Shares of Vistra have dropped 4% in the last three months but are up 19% over the past 52 weeks.

About Xcel Energy Stock

Xcel Energy has 3.9 million electricity customers and 2.2 million natural gas customers, making for a total of 6.1 million. According to the firm, 53% of the energy it provided in 2025 was carbon free. By 2030, Xcel Energy estimates that 83% of the energy it provides will be carbon free, given its projected energy mix.

During Q4 2025, Xcel Energy's operating income jumped to $580 million, up from $347 million in Q4 2024. For full-year 2025, operating income climbed to $2.58 billion, up from $2.38 billion in 2024.

XEL stock has a trailing P/E ratio of 21.1 times and a forward P/E ratio of 19.4 times. Shares of XEL have advanced 7% in the last three months and gained 11% over the past year. 

Utilities Perform Well After Oil Shocks, Data Centers and Electricity Prices Add to Attractiveness

According to wealth management firm Schroders, utility stocks have historically produced reliable returns of more than 5% in the 12-month periods following huge issues with oil exports. Utilities have been resilient to such developments because they are one of the sectors that remain relatively well protected from the deceleration of economic growth.

Meanwhile, according to an assessment by S&P Global published in October 2025, the amount of electricity provided by utilities to data centers will surge to 75.8 gigawatts in 2026 from 61.8 gigawatts in 2025. By 2030, data centers are expected to require 134.4 gigawatts of power.

“The data center boom is driving the robust load-growth estimates of many electric utilities, largely fueled by the emergence of AI,” S&P Global reported.

Electricity demand increases are also causing electricity prices to jump. Electricity costs rose 6.3% in the U.S. in the 12 months ended in January, per the last Consumer Price Index (CPI) report. So utilities — including VST and XEL — are benefiting from stronger demand for electricity and higher electricity prices.

The bottom line: both of these names provide conservative GARP investors with defensive attributes and a growth “kicker.”