Investors, oil barons and wildcatters alike have made and lost vast fortunes in the oil patch. The trends of oil busts to oil booms come and go, and currently the oil patch is in the not-fun part of that boom-bust cycle. Still, those investors with long-term views are able to look beyond the next day’s, week’s or month’s direction in oil prices. Some can even look out quarters or years in their hunt for bargains.
This past week brought some very big calls from Wall Street analysts in the oil patch and energy sector. These calls have no intention of predicting the oil price direction tomorrow, next week or even next month. They are looking into 2016 or even further.
24/7 Wall St. tracks many analyst upgrades and downgrades each day to find new ideas, great value and hidden gems for investors and for our readers. Investors need to keep a few things in mind about analyst research reports. These analysts can be wrong, and they often are wrong. Right now, the current direction of oil prices is certainly not helping energy investors looking for long-term bargains.
This week Citigroup lowered its oil projections, and even gave a 30% chance or so that the price of oil could drop well down into the $30s. We also noticed that Warren Buffett keeps exiting out of his oil bets, and Buffett does generally know at least a thing or two about money and investing.
Again, the oil and gas analysts are not looking at the price direction this week when they make their calls. These are all for long-term investors, and that target group should know that these current prices and future price targets will likely take a hit if oil’s slide continues. These are the six energy stocks that analysts want their firms’ clients to buy now, with additional calls and data at the end.
Anadarko Petroleum Corp. (NYSE: APC) has been called a great value in the oil and sector before, but Argus issued a very warm report calling for massive upside. The firm even named Anadarko as a potentially great buyout candidate ahead. Argus already has Anadarko on its Focus List, but it was so aggressive that it raised its price target to $105 from $100 in its Tuesday call. Anadarko closed at $76.25 on Friday, and it has a consensus analyst price target of $98.06 and a 52-week range of $69.40 to $113.51.
Kinder Morgan Inc. (NYSE: KMI) was given a massive endorsement on Friday by Goldman Sachs. The firm already had a Buy rating, but the king of infrastructure and former master limited partnership (MLP) was raised to the prized Conviction Buy List. Goldman Sachs even assigned a $48.00 price target. Kinder Morgan closed at $33.14 before the call but rose 2.5% to $33.96 afterward on Friday. It has a consensus price target of $46.00 and a 52-week range of $31.09 to $44.71. That 5.8% or so true dividend yield would leave an implied upside of almost 50%, if Goldman Sachs is right.
Laredo Petroleum Inc. (NYSE: LPI) was raised to Outperform from Market Perform at Raymond James last Monday. The firm assigned an $11.00 price target, much higher than the $8.01 prior close. Despite weak oil trends this week and despite the market not being kind to speculative stocks, Laredo Petroleum closed out the week at $9.30. It has a consensus price target of just under $12.00, and the 52-week range is $6.35 to $24.54. For those wanting the other side of the coin: KeyBank started Laredo with a Sector Weight rating later in the week, warning that it faces a deteriorating leverage that may hinder its operations and growth ahead and warning about a premium value to peers.