Not all stocks are created equal, and this year energy stocks could quickly become the market's favorite. A once-in-a-cycle opportunity to line up your portfolio with all the macro forces at play could be right around the corner. Some analysts, who are expecting a new rally, have already begun to pick the likely outliers in this group, but more on that later.

Traders have recently become bullish on oil, as futures at the CME Group (NASDAQ: CME) reflect that futures are now in a contango situation. Contango is a fancy way of saying that traders are bullish on the future price of oil. The last time this happened was in 2021. You all know what oil did a year later (it got up to $115 a barrel).

There are many reasons to believe that oil could reach $100 a barrel again, from macroeconomic trends to the opinions at one of Wall Street's most widely followed investment banks. However, all you need to worry about for now is that Marathon Oil (NYSE: MRO) could be the best upside story in this coming rotation.

Get the big picture first

There is a clear divide between the Energy Select Sector SPDR Fund (NYSEARCA: XLE) and the broader S&P 500 index, which shows an underperformance of up to 24.6% during the past twelve months, leaving the energy sector behind everyone else. As cycles always do, a new money rotation could swing this gap in favor of energy.

Because the market now expects the FED to bring interest rate cuts this year, commodity-based stocks could see a significant inflow of investment dollars. According to the FedWatch tool at the CME Group, traders are pricing in cuts that could come as soon as May or June of this year.

But of course, money rarely waits for the shift to be under its nose to begin the move. It is likely (as you know with futures traders) that some big players are already positioning themselves. Analysts at The Goldman Sachs Group (NYSE: GS) expressed their projection for oil prices during 2024, which stands between $70 and $100 a barrel.

It's no coincidence that these same analysts, in their 2024 macro outlook report, expect to see a breakout of the manufacturing sector in the U.S. economy. Increasing manufacturing activity will take a lot of oil, which is yet another way for Goldman to warn you of higher oil ahead.

So, look, all of these macro trends and theories sound nice, but what will cause the shift into the energy sector? Apart from waiting for the potential FED cuts to come this year, rising geopolitical conflicts are already sparking a small fire for the commodity.

Why Marathon?

This is all positive for Marathon Oil stock, but why not look at other peers? After all, Buffett chose Occidental Petroleum (NYSE: OXY) and has stuck with it for a while. But you're not here to add stocks to your pension; you're looking for the best way to get in and out of this coming cycle swing.

To position your portfolio in this best pick, two things should come up first in your filtering process. First, you want to get into the stock that proposes above-average growth in earnings, right? You should get the stock at a cheaper valuation than other alternatives.

Taken as a group, the oil and gas industry is expected to grow its EPS by an average rate of 7.1% in the next twelve months. Buffett's Occidental got analysts to project an 18.6% growth, while Marathon commanded 21.5% instead.

While both are expected to grow at above-industry-average rates, you can't deny the slightly more significant growth in Marathon. So, the real difference maker now comes in the way of valuation. At a 14.6x price-to-earnings ratio, Occidental trades at a 63.2% premium valuation to Marathon's 9.0x multiple.

Because one is cheaper yet expected to grow more than the other, the same analysts making their EPS projections reflected this view via their price targets as well. At a $31.20 per share price target, Marathon analysts are calling for a 33.3% rally from where the stock trades today.

On the other hand, while a $70.10 price target for Occidental stock offers a decent 15.8% upside from today's prices, that is half of the upside you are now aware of in Marathon. Do yourself – and your portfolio – a favor and consider MRO stock for your "energy rally" scenario.