ConocoPhillips

This stock may offer investors solid upside potential and the company could start growing the dividends again. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG) and NGLs worldwide.

Conoco’s portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects. Many Wall Street analysts feel the company can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford, and with visibility on future growth from a sizable position in the Permian.

Conoco has redefined its investment case with the highest free cash leverage to a recovery in oil prices among the big oil plays. Management has addressed key questions around portfolio resilience, and share buybacks have been prioritized over growth. The analysts noted:

Conoco has more than doubled the high-end of its original asset sale target ($16 billion versus $5-8 billion). Further, we have been encouraged by its continued strong execution on quarterly earnings. As the asset sales cash comes in the door and get directed toward debt paydown and buybacks, we think that this will start to remove some of the leverage overhang and help it re-rate to a more normal valuation versus peers.

Investors receive a 2.31% dividend. The $49 JPMorgan price target is less than the consensus target of $50.50. Shares were last seen at $46.25.

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Canadian Natural Resources

This top Canadian play is JPMorgan’s top pick, based on a free-cash-flow yield basis. Canadian Natural Resources Ltd. (NYSE: CNQ) acquires, explores for, develops, produces, markets and sells crude oil, natural gas and NGLs. The company operates primarily in Western Canada; the U.K. sector of the North Sea; and Côte d’Ivoire, Gabon and South Africa in offshore Africa.

The company offers light and medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen and synthetic crude oil. Its midstream assets include three crude oil pipeline systems and a 50% working interest in an 84-megawatt cogeneration plant at Primrose.

JPMorgan feels that the company’s metrics remain among the best in its research universe and noted this:

The company can cover sustaining capital and dividends at $40 per barrel with an
Improving balance sheet (2018 estimated ~3.1x net debt/CFO at $50 per barrel Brent), levers to pull if required and a good mix of growth/return of capital.

Shareholders receive a 2.65% dividend. JPMorgan has set its price target at $45. The consensus target is $38.34, and shares traded Friday at $32.90.

Noble Energy

Noble Energy Inc. (NYSE: NBL) is an independent energy company engaged in the acquisition, exploration and production of crude oil, natural gas and NGLs worldwide. Its principal projects are located in DJ Basin, Marcellus Shale, Eagle Ford Shale and Permian Basin of the United States, as well as in deepwater Gulf of Mexico, offshore Eastern Mediterranean and offshore West Africa. As of December 31, 2015, the company had approximately 1,421 million barrels oil equivalent of total proved reserves.

Noble sanctioned in February the phase 1 development of its giant natural gas discovery in Israel for a gross development cost of $3.75 billion with first sales expected in late 2019. The project will include the development of 9.4 trillion cubic feet gross from four producing wells, each capable of producing in excess of 300 million cubic feet per day.

The JPMorgan team noted:

We believe Noble’s diversified portfolio is poised to deliver differentiated growth at low capital costs as the company enters an attractive phase of its investment cycle, with the Delaware Basin poised to shift into development mode, supporting a double digit corporate oil growth objective in fiscal 2018 and fiscal 2019 from a low single digit clip in fiscal 2017.

Shareholders receive a 1.54% dividend. The JPMorgan price target is $31. The consensus target is $35.93. The stock was last seen at $26.00.

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These five top energy stocks may offer long-term and value investors the best entry points since the lows of 2016. While the energy sector could remain volatile, buying at these levels certainly takes some of the risk premium out.