Energy

Jefferies Identifies Oil and Gas Stocks to Buy

Despite a market that has become negative on many commodity subsectors and a U.S. dollar that has appreciated and stunted energy pricing temporarily, some energy stocks are looking extremely attractive. Investors looking to add energy to their portfolio may have an opportunity right now to buy quality names at very fair prices. In many cases these have become value stocks.

In a new research report, Jefferies has done some in-depth work on domestic oil and gas exploration and production companies. They have screened for stocks that may actually exceed Wall Street estimates. Their research also points out that, with oil near $94 and with natural gas trading close to multiyear highs at $4.37 MMBtu on last look, these companies can support strong earnings growth. Here are the nine top energy stocks to buy from Jefferies.

Chesapeake Energy Corp. (NYSE: CHK) leads off the list. Finally free of controversial former leader Aubrey McClendon, the company can focus on its core natural gas business. The Jefferies price target for the stock is $26. The Thomson/First Call estimate is $22.

Continental Resources Inc. (NYSE: CLR) is a pure Bakken shale play. As the number one producer in the Bakken shale, Continental also may be a possible takeover candidate. The Jefferies price target is $98. The consensus estimate is in line at $100.

Devon Energy Corp. (NYSE: DVN) is a stock to buy at Jefferies. Armed with not only solid reserves, but a very profitable midstream business adding to earnings, Devon is continuing to spend to increase its capability. The Jefferies price target for the stock is $71. The consensus estimate is at $70.

EOG Resources Inc. (NYSE: EOG) makes the list and looks to be on the path to super major status. The Jefferies price target for this top name is $155. The consensus target is $148.75.

Gulfport Energy Corp. (NASDAQ: GPOR) is a lesser known name that has been hitting 52-week highs lately. The Jefferies price objective is $78. The consensus is at $59. The Jefferies target represents an almost 50% move from current trading levels.

Matador Resources Co. (NYSE: MTDR) is another small cap name that makes the Jefferies list. Primarily a play on the Eagle Ford shale in Texas, its earnings have been growing extremely fast. The Jefferies price target is $13. The consensus estimate is also $13.

Oasis Petroleum Inc. (NYSE: OAS) is another Bakken shale success story. This is clearly evidenced by looking at production, which grew 82% year over year, while reserves have grown at a compound annual rate of 121% since 2009. The Jefferies target is $50. The consensus target is $44.

Penn Virginia Corp. (NYSE: PVA) is a comeback candidate to make the list. Trading above $80 in 2008, the stock has slipped below $5. The Jefferies target for the stock is $6.50. The consensus estimate is $6.75.

Swift Energy Co. (NYSE: SFY) completes the Jefferies list of energy stocks to buy. Another solid small cap name, Swift has seen good insider buying over the past year. The Jefferies price target is $25. The consensus target for the stock is $21. A move to either price target would be a gain of more than 50%.

Global growth means growing energy demand. The United States is poised to become a net exporter of energy around the world. Jefferies has done a solid job of picking stocks that may provide investors with above average returns at reasonable prices.

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