With all the attention being directed to analysis of domestic supply dynamics, more and more Wall Street firms are starting to look closer at the worldwide oil supply. In fact, a new report from Deutsche Bank focuses on the 40 million barrels per day that is not from the current big suppliers like the United States and Organization of the Petroleum Exporting Countries (OPEC) members. One thing the analysts are focused on is reminding investors not to expect a major roll-over in non-OPEC supply in the next two years.
With those caveats in mind, they are focusing on the fact that for reasonable growth, $70 per barrel is needed, as compared to benchmark West Texas Intermediate (WTI) trading right around $60 per barrel. The Deutsche Bank team raises price targets on top stocks to buy, and investors looking to own leading energy stocks can consider all of these as top companies.
This company is one of the most widely recommended energy stocks from the firms we cover at 24/7 Wall St. 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.
With the resolution of Tronox liabilities and the resulting tax adjustments, most on Wall Street expect the focus to shift back to the positive underlying operating trends and the potential for further monetization and sell-down of major assets this year.
Top Wall Street analysts see the company growing at or above 15% total production from the higher margin portions of their portfolio, which in turn could end up boosting the firm’s WTI price realizations. In other words, more oil equals more money.
Anadarko investors are paid a 1.3% dividend. The Deutsche Bank price target is raised from $96 to $100. The Thomson/First Call consensus estimate is at $102.09. Shares closed Monday at $83.84.
This stock is very solid story for investors looking to stay long the energy sector. Chevron Corp. (NYSE: CVX) sports a sizable divided, and has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG). Some Wall Street analysts estimate the company will have a compound annual growth rate of over 5% for the next five years, and the stock trades at a modest valuation discount to some of its mega-cap peers.
Chevron management is aggressively pursuing cost saving initiatives and has already completed over 2,200 supplier engagements with 700 more in progress. Cost savings and improving investor sentiment may be a key for the mega-cap integrated as it has struggled mightily over the past year.
Chevron investors are paid a large 4.15% dividend. The Deutsche Bank price target is raised to $125 from $120. The consensus is set at $113.99. Shares closed Monday at $102.63.