Energy

Stifel Has 5 Top Energy Stocks to Buy Under $10 With Massive Upside Potential

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While most of Wall Street focuses on large and mega cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Many of the biggest public companies, especially the technology giants, trade in the low-to-mid hundreds, all the way up to over $1,000 per share. At those steep prices, it’s pretty hard to get any decent share count leverage.

Many investors, especially more aggressive traders, look at lower-priced stocks as a way to not only make some good money but to get a higher share count. That can really help the decision-making process, especially when you are on to a winner, as you can always sell half and keep half.

With the sharp rise in the price of oil, and with most stocks lagging the big move, it makes sense to add weighting to the sector now. We screened Stifel’s energy research universe and found the following five stocks trading under the $10 level that could provide investors with some solid upside potential. While much better suited for aggressive accounts, they could prove exciting additions to portfolios looking for solid alpha potential and energy exposure.

Antero Resources

This company with big potential for investors got tagged recently and is offering a nice entry point. Antero Resources Corp. (NYSE: AR) is engaged in the exploration, development and acquisition of natural gas, natural gas liquids (NGLs) and oil properties located in the Appalachian Basin. Other activities include water handling and treatment, and marketing of excess firm transportation capacity.

The company’s subsidiary, Antero Midstream Partners, is a master limited partnership that owns, operates and develops midstream energy infrastructure primarily to service its production and completion activity. Its exploration and development activities are supported by the natural gas gathering and compression assets. The combination of the two makes this a solid pick for investors.

Stifel has a towering $18 price target on the stock, and the Wall Street consensus price target is $13.66. Shares traded on Friday’s close at $8.69 apiece.

Callon Petroleum

This is one small-cap stock about which the Stifel team currently feels very comfortable. Callon Petroleum Co. (NYSE: CPE) is an independent oil and natural gas company that is engaged in the exploration, development, acquisition and production of oil and natural gas properties. The company focuses on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin.

Callon’s drilling activity focuses on the horizontal development of various prospective intervals in the Midland Basin, including multiple levels of the Wolfcamp formation and the Lower Spraberry shale. The company made a huge $570 million acquisition of 29,000 net acres last May, which more than doubled its Delaware Basin footprint.

Stifel has a price target of $12, while the posted consensus target was last seen at $11.19. The stock was trading at $8.21 a share on Friday’s close.

Chaparral Energy

This energy stock has been obliterated and may have massive potential upside. Chaparral Energy Inc. (NASDAQ: CHAP) engages in the onshore oil and natural gas acquisition, exploitation, exploration and production. It focuses on deposits of Stack, Meramec and Osage, Oswego and Woodford located in Oklahoma and the Texas Panhandle. As of March 29, 2018, it had estimated potential reserves of a billion barrels of oil equivalent.

Chaparral announced recently that it anticipates 2019 total company production to be between 25,000 and 27,000 barrels oil equivalent per day, which represents an anticipated 22% to 32% year-over-year growth. Total Stack production is expected to be between 21,000 and 23,000 barrels oil equivalent per day, which would be a year-over-year growth rate of 45% to 59%. While full-year production will have significant growth, first-quarter production will be affected by the timing of first sales associated with Chaparral’s current spacing tests and remaining drilling joint venture wells.

The gigantic $22 Stifel price target is even higher than $18.38 consensus figure. The shares closed trading most recently at $5.66.

Gulfport Energy

This has been one of the favorites around Wall Street among the smaller and more nimble companies. Gulfport Energy Corp. (NASDAQ: GPOR) is an independent oil and natural gas exploration and production company with its principal producing properties located in the Utica Shale of eastern Ohio and along the Louisiana Gulf Coast.

In February, the company reported earnings that fell short of consensus estimates, but revenues rose a solid 4.5% year over year and were better than Wall Street analysts had anticipated. The company also announced that budgeted 2019 total capital expenditures of $565 million to $600 million will be funded entirely within cash flow.

Stifel has set an $8.90 price target. But the consensus target price is $11.63, and the shares were last seen trading at $7.74 apiece.

QEP Resources

This stock has had a nice run off the bottom but still holds huge upside potential. QEP Resources Inc. (NYSE: QEP) is a holding company engaged in the exploration and production of oil and natural gas properties. It focuses on the northern region (primarily in North Dakota, Wyoming and Utah) and the southern region (primarily in Texas and Louisiana).

Aethon Energy Management recently announced the completion of its acquisition of natural gas assets from wholly owned subsidiaries of QEP Resources. The assets are located in the Haynesville basin in northwest Louisiana.

Stifel has a massive $18 price objective on the stock. The analysts’ consensus target is $10.30, and the share price ended the week at $8.18.

These are five energy stocks for aggressive accounts that look to get share count leverage on companies that have sizable upside potential and to add energy exposure. While not suited for all investors, these are not penny stocks with absolutely no track record or liquidity, and a major Wall Street firms have research coverage.

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