Energy
Why Jefferies Wants Investors to Buy 4 Top Energy Stocks Now
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One thing energy investors are acutely aware of is that the oil downtrend has been brutal. The sector has underperformed for every year since 2012, which is unprecedented, and the amount and duration of stocks hitting 52-week lows was also unprecedented since energy sector data became available. Toss in short sellers absolutely slamming the stocks, and you end up with the excruciating bloodbath we have experienced.
In a new research report, Jefferies analyst Jason Gammell now sees more upside than downside to oil from current levels, and he thinks oil could average $39 a barrel in the second half of 2016. So not only could energy perform better, but it may be a harbinger for the broader market. With Russia and OPEC perhaps closer to an understanding, there could be some serious upside potential.
Jefferies has nine top picks, and here are four that look poised for solid upside.
Anadarko Petroleum
This top stock is down a stunning 65% since May of 2015. Anadarko Petroleum Corp. (NYSE: APC) operates through three segments. The Oil and Gas Exploration and Production segment explores for and produces natural gas, oil, condensate and natural gas liquids (NGLs).
The Midstream segment provides gathering, processing, treating and transportation services to Anadarko and third-party oil, natural gas and NGL producers, as well as owns and operates gathering, processing, treating and transportation systems in the United States. The Marketing segment markets oil, natural gas and NGLs in the United States; oil and NGLs internationally; and anticipated liquefied natural gas production from Mozambique.
The company’s asset portfolio includes U.S. onshore resource plays in the Rocky Mountains, the southern United States, the Appalachian basin and Alaska; the deepwater Gulf of Mexico, as well as others in Mozambique, Algeria, Ghana, Brazil, Colombia, Kenya, New Zealand and elsewhere.
In December, the company once again posted better-than-expected earnings and raised the guidance going forward. In addition to the strong performance, Anadarko is lowering costs and keeping the balance sheet as clean as possible.
Anadarko investors receive a 2.76% dividend. The Jefferies price target on the stock is a staggering $88, and the Thomson/First Call consensus target price is $65. Shares closed Friday at $39.09.
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