While this past week was rocked down and back up by the woes of China and Greece, investors keep looking for value and opportunity. The trend of investors buying every dip has lasted for nearly four years. With the oil and gas sector having fallen so hard in the past year, many long-term investors have been searching for oversold stocks and hidden value where they can find solid upside in the next year or in the years ahead.
24/7 Wall St. reviews dozens of analyst upgrades and downgrades each day. The goal is to find the hidden value or upside calls that stand out above the rest of the pack. Analysts are far from omniscient, and investors have to assume that even the best oil and gas outfits will not bring a happy ride if oil heads back down toward $40 again.
These are some of the top oil and gas analyst calls shown from this past week. We have provided some links to more detail in some of the calls, and the second page offers more calls that stood out as well in the oil and gas sector.
ConocoPhillips (NYSE: COP) may be large with a $73 billion market value, but independent research firm Argus sees shares fairly valued at about 40% higher. In the middle of this past week, the firm reiterated its Buy rating and raised its price target to $82 from $75. Argus said that a combination of major long-cycle and unconventional short-cycle projects will enable ConocoPhillips to generate shareholder value in a range of commodity price environments. The consensus price target for the stock is $74.35, and the 52-week trading range is $58.08 to $87.09. Friday’s closing price of $59.13 and the 4.9% dividend yield leaves over 40% implied upside.
Spectra Energy Corp. (NYSE: SE) lives around natural gas, so it has been muted. Still, Argus came out late last week and reiterated its Buy rating and price target of $40.00 (versus $31.04 prior close and the $31.28 Friday close). This target is almost $2.50 above the consensus price target, and if Argus is right then it implies expected returns of more than 30%, if you include dividend payments. The Argus call on Spectra was based on Spectra’s solid fee-based businesses, its financial strength and its ability to expand its asset footprint.
Superior Energy Services Inc. (NYSE: SPN) may be on the equipment and services side of oil and gas, but on Friday its stock was raised to Buy from Hold at Jefferies. What stood out was that after a big drop the firm actually decided to lower its price target to $25 from $28. This compared with a $19.88 prior close, and the stock closed at $19.73 on Friday. It still represents over 28% implied upside when you add in the dividend, and Superior is already down almost 50% from its 52-week high.
Weatherford International PLC (NYSE: WFT) was raised to Buy from Hold at Jefferies late last week, but its price target was cut by $1.00 to $14.00. This compared with a prior $11.48 close and Friday’s closing price of $11.33. What really stands out, besides the call still leaving an implied upside of almost 25%, is that the consensus price target is higher at $15.89. Also, the 52-week range of $9.40 to $24.88 does not exactly imply that a $14 to $16 share price is out of the ordinary.