Oil prices had an eventful year in 2016.

Known to be extremely volatile, the industry began the year by falling to $26-a-barrel -- the lowest since 2003. This set off a wave of bankruptcy filings, with dozens of small and high-cost U.S. producers asking for protection under Chapter 11.

A plethora of jumps and drops followed and crude oscillated between the $35-$45 per barrel range for most of the year until November when it received a booster shot.

In a bold but not unexpected move, the OPEC cartel agreed on Nov 30 to reduce production from January this year. Seen as a desperate bid to put a floor on falling oil prices, the group – led by Saudi Arabia – promised to take 1.2 million barrels a day out of the market.

OPEC's decision to cut oil production was not totally surprising though the magnitude of reduction were deeper than many analysts had expected. The move aims to trim output to 32.5 million barrels per day -- at the low end of a preliminary agreement struck in September.

Russia, which is not part of the body that pumps a third of the world’s oil, will also join output cuts for the first time in 15 years. The biggest supplier outside the bloc relented from its longstanding position of only freezing production and agreed to cut 300,000 barrels from its record high output of more than 10 million barrels a day.

At the end of it, the price of crude oil rose an impressive 45% in 2016. This helped ‘Energy’ to be crowned as the top performing S&P sector last year with a market-thumping 24% return.

The best part is that oil prices have held above $50-a-barrel since OPEC and countries including Russia agreed to trim supply late last year.

An Increasingly Upbeat Energy Market for 2017

Yes, oil had a great 2016 but what about 2017? Will history repeat itself?

While it’s hard to predict whether oil will double again and energy will outperform all other sectors next year, there's reason to believe that 2017 could be an excellent one for oil stocks.

After a 2½ year bear market, the rig counts – both U.S. and International – have bottomed and activity is starting to bounce off slowly. Oil has rebounded from its multi-year lows reached in 2016 and while the commodity may not be at a level many thought it would be at the end of the year, even at today’s price certain companies are in a position to earn profits.

Throughout the downturn, producers worked tirelessly to cut costs down to a bare minimum and look for innovative ways to churn out more oil from rock. And they managed to do just that by improving drilling techniques and extracting favorable terms from the beleaguered service producers.

With these efforts, many upstream companies have repositioned themselves to thrive even at lower prices. Moreover, lower capital expenditures have led to numerous project cancellations and production losses - another step in reducing the glut of crude.

The deal by members of the OPEC oil cartel to cut output is expected to bring much needed stability to the market with prices set to improve steadily. Multinational oil enterprises, on the back of greater certainty, will now be able revive spending on drilling activities.

Thus, there's a possibility that the sector will see a replay of 2016 -- with attractive upside potential and good returns.

Opt for Value Picks with Earnings Growth

Since the long-term landscape holds well for energy stocks, despite certain bottlenecks, it will be a wise decision to invest in value stocks.

Value investing offers an opportunity to enter the market and grab stocks that have otherwise been overlooked by a majority of investors, and are thus trading at cheap multiples.

Thanks to our new style score system, we have been able to identify value stocks which have incredible potential in the near term. Our research shows that stocks with Value Style Scores of ‘A’ or ‘B’ when combined with Zacks Rank #1 (Strong Buy) or 2 (Buy) offer great investment opportunities. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Further, we have chosen those value stocks that have an estimated growth rate of more than 20% this year.

5 Stocks to Invest In

Sundance Energy Australia Ltd. (SNDE - Free Report) : Headquartered in Wayville, Australia, Sundance Energy is focused on the acquisition and development of oil and gas across North America and Australia.

Zacks Rank: #1

Value Score: ‘B’

Estimated growth rate for this year: 212.08%

Plains All American Pipeline L.P. (PAA - Free Report) : Houston, TX-based Plains All American Pipeline, a master limited partnership, is involved in the transportation, storage, terminalling and marketing of crude oil, natural gas, natural gas liquids and refined products in the U.S. and Canada.

Zacks Rank: #2

Value Score: ‘A’

Estimated growth rate for this year: 121.79%

Western Refining Inc. (WNR - Free Report) : Incorporated in 2005, El Paso, TX-headquartered Western Refining is an independent refiner and marketer of refined petroleum products in the Southwestern and Mid-Atlantic regions of the U.S.

Zacks Rank: #2

Value Score: ‘A’

Estimated growth rate for this year: 43.68%

EnLink Midstream LLC (ENLC - Free Report) : Headquartered in Dallas, TX, EnLink Midstream is involved in natural gas gathering, treating, processing, transmission, distribution, supply and marketing, and crude oil marketing.

Zacks Rank: #2

Value Score: ‘B’

Estimated growth rate for this year: 288.33%

Stone Energy Corp. (SGY - Free Report) : Lafayette, LA-based Stone Energy is an independent oil and gas exploration and production company engaged in the acquisition and subsequent exploration, development, operation and production of oil and gas properties located primarily in the Gulf of Mexico.

Zacks Rank: #2

Value Score: ‘B’

Estimated growth rate for this year: 38.81%

Bottom Line

Despite the volatility in the energy markets, we suggest these top-ranked stocks – with a good value score and solid earnings growth forecast – as attractive bets for investors.