The energy sector has had a very solid 2014 as money has continued to chase some of the top large cap leaders in the area. As the price of West Texas Intermediate (WTI) has finally broken through the $100 level, many firms on Wall Street are still bullish on the sector, but they are looking to different companies for the path forward.
A new research report from the energy team at Stifel maintains that there is a risk that the correction that started in late June has not yet finished, that value names should hold up better than growth names and that natural gas names should hold up better than oil names from here. The report highlights top stocks to buy now that may give investors a better risk/reward return from the sector as we finish up 2014 and head into next year.
Anadarko Petroleum Corp. (NYSE: APC) is one of the biggest independent oil and gas producers in the country, with exploration or production work in all major domestic drilling areas, as well as in South America, Africa, Asia and New Zealand. Worldwide, natural gas makes up just over half of Anadarko’s reserves, but 87% of the new wells it drilled in the United States last year were gas wells. The company has daily production over 2.6 billion cubic feet. Investors are paid a 1% dividend. Stifel has a $128 price target. The Thomson/First Call consensus target is $125.57. Anadarko closed Monday at $108.85.
EOG Resources Inc. (NYSE: EOG) is another top stock to buy at Stifel. The company is fueling record oil and natural gas production that is revolutionizing the U.S. energy position. Its position in the three biggest tight oil plays makes it a huge player in the exploration and production field. EOG is the top producer in the Eagle Ford Shale and it has solid rankings in both the Bakken and Permian Basin. Investors are paid a tiny 0.4% dividend. Stifel has a $120 target price. The consensus target is $124.42. EOG closed Monday at $105.43 a share.