Energy Business

Oil Continues to Explode Higher: 4 Goldman Sachs Conviction List Picks to Buy Now

Suncor Energy

This is a top Canadian energy play for investors to consider. Suncor Energy Inc. (NYSE: SU) operates as an integrated energy company and primarily focuses on developing petroleum resource basins in Canada’s Athabasca oil sands.

Suncor explores, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. It also transports and refines crude oil, markets petroleum and petrochemical products primarily in Canada and markets third-party petroleum products.

With the North American majors pivoting more toward the Permian with potential free-cash-flow implications, the company does not expect its “industrial model” to change. The focus remains on reliable cash flow, steady capital allocation framework and top-tier cash returns. In addition, the company is trading at a discount to its historical multiple.

Shareholders receive a 3.05% dividend. The $29 Goldman Sachs price objective is much less than the $42.83 consensus target price. Suncor Energy stock closed at $25.16 on Wednesday.

Targa Resources

This top energy midstream company has had a string of positives lately. Targa Resources Corp (NYSE: TRGP) is a leading provider of midstream services and one of the largest independent midstream energy companies in North America. Targa owns, operates, acquires and develops a diversified portfolio of complementary midstream energy assets.

The company is primarily engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling NGLs and related products, including services to liquefied petroleum gas exporters; gathering, storing and terminaling crude oil; storing, terminaling and selling refined petroleum products.

Targa Resources has one of the premier asset positions in the Permian basin. With solid management, a strong balance sheet and attractive exposure to some of the most attractive U.S. energy basins, it remains a top pick across Wall Street.

Investors receive a 1.16% dividend. Goldman Sachs has set a $55 price objective. The posted consensus target is lower at $46, and Targa Resources stock closed most recently at $48.96 a share.

These four top Conviction List energy picks are perhaps off the radar for some investors but are offering outstanding growth potential and reasonable entry points as compared to some of the other companies in the sector. It may make sense to buy partial positions now and see if prices don’t back up some, as this is typically the worst two-week period of the year for the market.