Now that oil has fallen from over $100 to under $50, and come back closer to $60, many long-term investors are looking for oversold value among the best oil and gas stocks to buy. The reality is that oil’s drop caught even the most bearish investors by surprise, and this has left many of the key players with battered share prices.
24/7 Wall St. reviews dozens of analyst upgrades, downgrades and initiations each day of the week to find overlooked or hidden value calls for its readers. For investors with a long-term view, this brings many opportunities in oil and gas stocks and in master limited partnerships (MLPs). Again — long-term. Analyst calls and stocks in the oil patch are subject to commodity prices, like it or not, and that means nobody can accurately call a bottom without luck.
There were many research reports this past week with big analyst calls in energy stocks. Many of these companies have recovered or are priced for long-term value investors to now consider positions. 24/7 Wall St. has reviewed nine different analyst calls in the energy sector with solid upside targets. Some obviously have more risk than others, but there are industry and sub-sector leaders in here as well.
Apache Corp. (NYSE: APA) was maintained as Outperform at RBC Capital Markets on Friday. The call remains positive, but RBC’s official price target was cut to $77 from $82 in the call. Apache shares closed up only 0.7% at $65.54 on Friday, and the stock has a 52-week range of $54.34 to $104.57 and a consensus price target near $71. If RBC’s lower price target proves to be right, Apache shareholders would get implied upside of over 18%, if that 1% dividend remains.
Enterprise Products Partners LP (NYSE: EPD) was reiterated as Buy at Argus early in the week. What really stood out in the call was a $44 price target, over $3 higher than the consensus price target. After closing out the week at $33.37, this leaves implied upside of over 35%, if you include its distribution. Enterprise is now the largest MLP, with a $66 billion market cap, and it is generally considered among the best few major MLPs out there.
Golar LNG Ltd. (NASDAQ: GLNG) was given a serious upside call of about 35% from Merrill Lynch this past week. This was also after huge gains were already seen when Golar signed an agreement with Ophir Energy for Golar’s GoFLNG vessel Gimi, its second floating natural gas production facility. Merrill Lynch already had a Buy rating for Golar LNG, but it raised its price objective to $60 from $40. The $46.08 close on Friday left implied upside of 35%, including the distribution. Golar LNG also has a consensus target of almost $55.
Marathon Oil Corp. (NYSE: MRO) was raised to Outperform from Market Perform at Wells Fargo after earnings on Friday. Marathon’s valuation range was raised to $34.00 to $36.00 from a prior range of $30.00 to $32.00, based on a discount to its net asset value (NAV) estimate of roughly $35.00 per share. With Marathon closing at $29.31 on Friday, the implied upside is about 10% in total return, but that $35.00 NAV target implies over 20% in total return implied, if that is right. Marathon has a 52-week range of $24.28 to $41.92 and a consensus price target of $32.78.
Whiting Petroleum Corp. (NYSE: WLL) had a mixed week because of David Einhorn outlining why he is short selling frackers. Still, the Bakken shale player was raised to Overweight from Equal Weight at Morgan Stanley earlier in the week. What really stood out was the price target of $48, versus a prior $37.68 close. Due to the Einhorn bash, Whiting closed at $35.45 on Friday. Whiting’s consensus target is closer to $43, but the Morgan Stanley target implies upside of roughly 35%. As a reminder, Whiting was once thought to be a buyout candidate. Those rumors and reports have since evaporated.