While the market continues to tread water near all-time highs, many investors are trying to find sectors that continue to offer upside potential for the second half of 2019, which begins on Monday. With the potential for some headway in the trade talks, and a hot summer with a busy driving season, energy is offering sizable value as we begin the third quarter.
Given the potential for more mergers and acquisitions coming, especially for Permian-based companies, we screened the Stifel energy research universe for top mid-cap companies rated Buy that also may be in play as M&A targets, and all have at least 100% or more upside to the Stifel price targets.
Carrizo Oil & Gas
This is a top energy stock for value buyers to consider. Carrizo Oil & Gas Inc. (NASDAQ: CRZO) is a Houston-based energy company actively engaged in the exploration, development and production of oil and gas from resource plays located in the United States. Carrizo’s current operations are principally focused in proven, producing oil and gas plays, primarily in the Eagle Ford Shale, the Utica Shale in Ohio, the Niobrara Formation in Colorado and the Marcellus Shale in Pennsylvania.
Many on Wall Street see the company as one of the best positioned due to the low breakeven costs, solid operating scale and a very good balance sheet with ample liquidity. Top analysts also think the company may take advantage of difficult situations for others and make acquisitions, especially in the Eagle Ford.
The Stifel price target on the stock is a stunning $41. The Wall Street consensus target is much lower at $18.58, and the stock closed Friday’s trading at $10.02 per share.
This is a smaller capitalization stock for aggressive investors to consider. Parsley Energy Inc. (NYSE: PE) is an oil and gas producer with 227,000 net acres in the Permian Basin. The majority of acreage sits on the Midland side of the basin, but the company also holds a small acreage position in the Delaware Basin. Through strategic acquisitions and acreage swaps, it has grown its acreage position since its initial public offering and has over 7,900 horizontal locations across multiple prospective zones.
The company is a catalyst rich Permian Basin pure play. Parsley Energy has some of the strongest wells in the basin, generating returns that are among the best in the industry. It is also rapidly de-risking its drilling inventory and is well positioned to continue to beat its strong growth projections.
Stifel has a price target of $38 on the shares, while the posted consensus price target is $27.07. The stock closed most recently at $19.01 a share.
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