Jefferies Has 3 Top Oil Stocks to Buy for a Return to $50 Oil


While the recent surge of oil seems to have run into a wall at $40, one thing seems to be in place. The market lows appear to have been put in with the drop into the mid-$20s and subsequent bounce back, and at least one top firm we cover here at 24/7 Wall St. thinks the low for the cycle is in.

A new Jefferies research note says that for the first time in history global capital expenditures in the energy industry will have fallen for two consecutive years. In addition, a combination of demand growth and non-OPEC production declines could very well set the stage for a $50 price handle by the end of this year.

We screened the Jefferies research universe and found three stocks the analysts are very positive on. All of course would benefit from a move higher to $50, and all are rated Buy.

Anadarko Petroleum

This top stock is still down a stunning 58% since the highs printed in 2014. 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 Midstream segment provides gathering, processing, treating, and transportation services to Anadarko and third-party oil, natural gas and NGLs producers, as well as owns and operates gathering, processing, treating and transportation systems in the United States. The Marketing segment markets oil, natural gas and NGLs in the United States; oil and NGLs internationally; and anticipated liquefied natural gas production from Mozambique.

The company’s asset portfolio includes U.S. onshore resource plays in the Rocky Mountains, the southern United States, the Appalachian basin and Alaska, and the deepwater Gulf of Mexico, as well as international plays in Algeria, Ghana, Brazil, Colombia, Kenya, Liberia, New Zealand and elsewhere. As of December 31, 2014, it had approximately 2.9 billion barrels of oil equivalent of proved reserves.

Back in December, the company once again posted earnings that beat estimates and raised the guidance going forward. In addition to its strong performance, Anadarko is lowering costs and keeping the balance sheet as clean as possible.

Anadarko investors receive a 0.43% dividend. The Jefferies price target for the stock is $57, and the Thomson/First Call consensus target is $58.10. Shares closed most recently at $46.27.

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