One way or another, this week will help to either add volatility in a big way or shut it off for a while. With the long-awaited Brexit vote finally about to happen, we will are closer to a decision. While last week the polls showed that a majority favor leaving, typically voters tend to opt for the status quo, and the polls and betting parlors reversed course over the weekend. One thing is for sure, oil, which many thought would retrace some of the recent gains, will continue to be volatile.

In a new Jefferies research note, the superb energy team led by Tom Marchetti notes that while many stocks have jumped ahead of current fundamentals, long-term investors should consider what they literally term as “edgy beta” stocks. Of equal importance, they say to avoid the temptation to buy the refiners, which were big winners over the past 18 months. Three stocks make the edgy beta grade at Jefferies.

Encana

This top stock has been absolutely mauled, down a gigantic 84% since the summer of 2014. Encana Corp. (NYSE: ECA) engages in the development, exploration, production and marketing of natural gas, oil and natural gas liquids (NGLs) in Canada and the United States. It owns interests in plays such as the Montney in northern British Columbia and northwest Alberta, Duvernay in west central Alberta, Clearwater in central and southern Alberta, Deep Panuke in offshore Nova Scotia, Cadomin/Doig in northeast British Columbia, Horn River in northeast British Columbia and Granite Wash/Doig in northwest Alberta.

The Jefferies analysts are bullish on the company, and earlier this year elevated the stock to the Franchise Picks portfolio, which represents the highest conviction stocks at the firm. The company reported weaker first-quarter numbers year over year, but the Jefferies analysts feel that the big reduction and debt and the potential for the company to sell assets remain a positive.

The Jefferies price target was raised to a whopping $12, and the Thomson/First Call consensus target price is much lower at $9.06. The stock closed Friday at $8.18 per share.

Marathon Oil

This company is a leading integrated oil and gas firm with extensive upstream operations. Marathon Oil Corp. (NYSE: MRO) operates through three segments. The North America Exploration and Production segment develops, explores for, produces and markets crude oil and condensate, NGLs and natural gas in North America.
The International Exploration and Production segment explores for, produces and markets crude oil and condensate, NGLs and natural gas in Equatorial Guinea, Gabon, the Kurdistan Region of Iraq, Libya and the United Kingdom, as well as produces and markets products manufactured from natural gas, such as liquefied natural gas and methanol in Equatorial Guinea.

The Oil Sands Mining segment mines, extracts and transports bitumen from oil sands deposits in Alberta and Canada, and it upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil.

Top analysts cite the company’s higher multiple businesses, and the upstream cash margins have room to move up as shale production increases and oil prices recover. They also point out the stock trades at a very attractive discount to net asset value relative to industry peers.

Marathon investors are paid a 1.55% dividend. Jefferies has a $16 target price for the stock. The consensus target is posted at $15.96. The stock closed most recently at $13.16 a share.

Oasis Petroleum

This is a smaller independent that could be an outstanding play for more aggressive accounts. Oasis Petroleum Inc. (NYSE: OAS) is an independent exploration and production company that focuses on the acquisition and development of unconventional oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin.

The principal projects of Oasis are located in West Williston and East Nesson. As of December 31, 2015, the company had 484,745 net leasehold acres in the Williston Basin and approximately 218.2 million barrels of oil equivalent of estimated net proved reserves. The company sells its oil and natural gas to refiners, marketers and other purchasers that have access to pipeline and rail facilities.

The company posted first-quarter results that were generally in line with expectations, although revenues came in slightly below. Over the years, Oasis has come up in takeover chatter as some on Wall Street see the company as a solid bolt-on acquisition candidate.

The Jefferies team recently raised the price target to $13, while the consensus target is down at $11.16. The stock closed Friday at $10.22.

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It is entirely possible the oil price could stay range-bound the rest of this year, but at least at the higher levels currently being printed, some companies are starting to make money again. However, wells are not turned on like a water spigot, and the low rig count could remain a positive for pricing.

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