Here’s a quick look at the other seven top ideas. All have been given a Buy rating.
APA Corp. (NYSE: APA) has a price objective of $47, implying upside potential of 59% to last Friday’s closing share price. The company formerly known as Apache is expected to show a 23% free cash flow yield and already has committed to return 60% of free cash flow to shareholders.
Hess Corp. (NYSE: HES) has a price objective of $131, implying upside potential of 54%. Cash flow is expected to rise by 64% year over year, largely on the strength of the company’s Liza project offshore of Guyanan.
Occidental Petroleum Corp. (NYSE: OXY) has a price objective of $52, implying upside potential of 59%. Even if crude oil were to average $60 a barrel in 2022, BofA thinks Oxy’s cash flow will still be around $7 billion. If debt reduction targets can be met by mid-year, that would “reset the dividend 5x and kick start buybacks to exploit high equity beta.”
Exxon Mobil Corp (NYSE: XOM) has a price objective of $100, implying upside potential of 46%. According to BofA, “Debt reduction, asset sales and project starts reload capacity for buybacks, while a refining recovery can close the gap of 50% upside to fair value.”
ConocoPhillips (NYSE: COP) also has a price objective of $100, implying upside potential of 27%. Conoco begins the year “with one of the most conservative [balance] sheets that has net debt/cap of 14%, prospective free cash yield of 14% and current dividend yield of 1.1%.”
EOG Resources Inc. (NYSE: EOG) has a price objective of $118, implying upside potential of 24%. The company is expected to reduce cost guidance over the course of 2022, improving further on the company’s $36 per-barrel break-even point. EOG also has the highest dividend yield of any pure-play exploration and production company at 3.3%.
Ovintiv Inc. (NYSE: OVV) has a price objective of $56, which implies upside potential of 47%. Formerly known as Encana, Ovintiv makes it to BofA’s top ideas list because the analysts believe the company’s free cash flow is “overly discounted, providing potential to meet its $3bn debt target ahead of schedule providing capacity for a step-change in cash returns via buybacks.”
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