The oil and gas sector is still trying to find its footing after oil fell precipitously from $100 to under $50. Many big and small energy players have been caught off guard, and one thing that about 90% or more of them have in common is that the value of their enterprises have fallen handily. With all sell-offs comes opportunity, and many investors now are looking for which oil and gas stocks and enterprises they should be investing in for the long term.
Oil may have gone under $50 a barrel, but the market has somewhat stabilized and oil is back above $57 now. So, which stocks are currently favored by analysts and investors? 24/7 Wall St. reviews dozens of analyst reports each morning of the week to find new trading and investing ideas for its readers. It turns out that there were many research reports this past week with big analyst calls in energy stocks.
The energy patch has not treated investors well if they just got into the sector in 2014. But many of these companies have recovered or are priced for long-term value investors to now consider positions. After all, many investors, particularly long-term value investors, look for battered companies to invest in — and there are plenty of battered oil and gas outfits.
24/7 Wall St. has reviewed some of this past week’s top oil and gas calls from analysts. We have included price targets, trading history and other color.
Investors should know ahead of time that almost every single analyst would admit that they do not know what price is ever the actual bottom. The upside price targets are generally a year out.
Nomura had a large sector call with positive targets this week, and the stocks that they overlapped on were included here. Here are the seven key oil and gas stock calls we have seen from analysts in recent days.
Anadarko Petroleum Corp. (NYSE: APC) was started with a Buy rating and a $104 price target (versus a $92.56 close) at Nomura on Wednesday. Shares also closed at $92.65 on Friday, leaving an implied upside of more than 12% if the firm’s target is hit. Then there is the 1% yield to consider. Anadarko’s consensus analyst target is $99.75 and there is still a target out there just over $120. Its shares have traded in range of $71.00 to $113.51 in the past 52 weeks.
EnCana Corp. (NYSE: ECA) has a $10 billion market cap. The natural gas player received two positive calls last week. It was raised to Overweight from Equal Weight at Morgan Stanley on Tuesday, and then Nomura started coverage with a Buy rating and $16 price target on Wednesday, against a consensus price target of $14.93. Shares closed out the week at $14.00, and they have a 52-week range of $10.53 to $24.83. Encana carries a 2.3% yield. Nomura’s price target implies upside of 14% or so.
Halliburton Co. (NYSE: HAL) was reiterated as Buy at Sterne Agee on Tuesday. The firm raised its forecasts on earnings and lifted the price target to $54 from $45, versus a prior $47.85 close. Friday’s close of $48 leaves an implied upside of 12%, plus that 1.5% dividend yield to consider. Halliburton was also reiterated as Outperform and the price target was raised to $56 from $48 at RBC Capital Markets, leaving almost 17% upside if RBC is accurate. Halliburton has a 52-week trading range of $37.21 to $74.33.
Marathon Oil Corp. (NYSE: MRO) was raised to Overweight from Equal Weight by Morgan Stanley on Monday. The firm’s price target was set at $37, versus a prior closing price of $30.52. After a close of $30.33 on Friday, this leaves an implied upside of 22%, plus the 3% or so yield. Marathon has a consensus analyst target that is only about $32.30, and it has a 52-week range of $24.28 to $41.92. Also, Nomura started Marathon with a Buy rating on Wednesday with a $36 price target.
NGL Energy Partners L.P. (NYSE: NGL) was reiterated with a Buy rating at Janney Capital Markets on Wednesday. The big issue here was the fair value estimate of $40.00, which implies close to 50% upside from the $27.46 prior target. The partnership’s units closed at $28.06 on Friday, and the consensus target price is closer to $35.50. NGL has one of those 8% yields, and there are more details in the call to better identify some of the risks.
RSP Permian Inc. (NYSE: RSPP) was started as Buy with a $34 price target at Wunderlich on Wednesday. This was against a $28.24 closing price ahead of the call, and the company closed at $28.44 on Friday. This implies upside of almost 20%, and RSP has a 52-week range of $19.36 to $33.67 and a consensus price target of $30.97. RSP’s market cap is $2.2 billion, and its stock has traded for less than two years after debuting around $20 in early 2014.
Suncor Energy Inc. (NYSE: SU) saw two positive analyst calls this past week, but formal U.S. dollar price target information for the Canadian oil sands giant was not available. UBS started coverage with a Buy rating on Friday, and Suncor was also started as Buy at Nomura on Wednesday. With shares closing on Friday at $33.06, and the consensus price target listed as $44.16, this implies upside of about 33% — plus its dividend. Suncor has a $48 billion market cap and a 52-week range of $26.56 to $43.49. Warren Buffett may be no Wall Street analyst, but he has his own buy rating as he keeps increasing his stake in Suncor.
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