The move higher in the price of crude oil has put the market in what is called backwardation. That is, spot prices are higher than prices for futures contracts, creating a downward-sloping curve for futures prices. With energy stocks strongly underperforming this year, some top analysts on Wall Street feel that the sector is well set up for a rotation of investors dollars to come in to the sector.

In a series of new reports, Jefferies points out that the strong and somewhat surprising third-quarter gross domestic product reading of 3% shows that growth in the economy is still in place. With global oil demand actually strengthening, the wild card is whether OPEC nations can stick to their production cuts. Toss in the fact that the U.S. oil rig count dropped again last week, and the ingredients for a continued rally could be in place.

Jefferies is very positive on four top energy companies, two of which are in the firm’s Franchise Picks portfolio of high conviction stocks to Buy. All make good sense for growth accounts with reasonable risk tolerance.

Anadarko Petroleum

This top company is still down a stunning 30% since January and is an outstanding Buy at current levels. 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 other segments are Midstream and Marketing.

The company reported third-quarter numbers that missed on what they said was another round of exploration charges related to prior period write offs. However, EBITDA did beat consensus estimates. Compounding the messy quarter, the company lowered its fourth-quarter production guidance, citing some storm impact, but predominantly asset sales.

Looking past the current issues, momentum from focused oil growth into 2018 remains intact, with stock buybacks set to accelerate in this quarter, which should push the shares higher. The Jefferies analysts forecast Anadarko generating aggregate free cash flow of $2.1 billion in 2018 to 2019.

Shareholders receive just a 0.4% dividend. Jefferies has a $58 price target on the shares. The Wall Street consensus target is $60.81. The shares closed Tuesday at $51.08.

Chevron

This integrated giant is a safer way for investors looking to stay or get long the energy sector, and it has big Permian Basin exposure. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals.

The company sports a sizable dividend and has a solid place in the sector when it comes to natural gas and liquefied natural gas. Some on Wall Street estimate the company will have a compound annual growth rate of over 5% for the next five years.

The company reported solid earnings for the third quarter, and the analysts have noted that the Permian Basin remains a key source of capital flexibility and is a key issue behind their relative preference for Chevron over some of the other majors. The report noted this:

Chevron reported earnings recently and the stock fell 4% on the day following results. Headline earnings per share looked like a miss, but if non-recurring items had been identified, we believe the number would have looked like a 4% beat. Production missed by 0.4% but rose 8% year over year and we expect 10% growth in 2018. We were surprised that the company did not increase the dividend this quarter, but the outgoing CEO indicated that the dividend decision may have been conservative and can be revisited in 90 days. We raise our 2018 EPS number and are well ahead of consensus. We’re buyers on weakness.

Chevron shareholders receive a 3.68% dividend. The Jefferies price target is $137, and the consensus price objective is $122.89. Shares closed Tuesday at $117.24.