Energy

Goldman Sachs Sees 7 Oil and Gas Stocks With Conviction Buy Ratings Having Major Upside

Eric Kounce / Wikimedia Commons

The oil and gas segment in energy has seen its shares of ups and downs in 2020. After what looked like a dead industry during the peak of the economic panic and pandemic-driven destruction demand, oil has at least come back to where fewer companies are facing existential risk. West Texas Intermediate crude came back above $40 a barrel in early June, and it has been hanging above $40 for most of July.

The research team at Goldman Sachs publishes many Buy and Sell ratings, but the most prized companies are generally referred to as Conviction Buy List stocks. These are the firm’s top ideas and are generally in mid-cap to large-cap companies. Goldman Sachs actually has seven oil and gas stocks on its Conviction Buy list, and it even has one solar stock.

Investors should always know never to use one firm’s research as a sole reason to buy or sell a stock. There are always other firms issuing coverage that coincides with or disagrees with a rating, and analysts can be wrong on their investment calls, just like investors can be wrong in their decisions.

The move to environmental, social and governance (ESG) themes has limited much of the interest in oil and gas stocks. After all, they are major sources of pollution, and many investment funds now have bans against investing in anything that is tied to fossil fuels. Still, Goldman Sachs believes all these energy stocks have considerable upside ahead.

24/7 Wall St. has provided some color on each call and compared the Goldman Sachs targets to the Refinitiv consensus analyst target prices to show whether there is really any stronger conviction than the average analyst expectations for the stock.

Baker Hughes Co. (NYSE: BKR) is one of the top oilfield services players out there, and Goldman Sachs has a $23 target price. This implies close to 41% upside from the current price, despite a drop in revenues largely expected in 2020.

Baker Hughes stock was last seen at $16.31, in a 52-week range of $9.12 to $25.99. The consensus price target is $19.42.

Cheniere Energy Inc. (NYSEARCA: LNG) remains the top play for exporting liquefied natural gas to other countries. The company owns the Sabine Pass LNG terminal in Louisiana and the Corpus Christi LNG terminal in Texas, as well as interconnecting pipelines. The $71 price target at Goldman Sachs implies more than 40% upside, if its assumptions come true, but this stock has traded at $70 for only very brief periods since shares were much higher back in 2015.

Cheniere Energy stock was trading at $49.79, with a consensus price target of $65.80. The stock has traded in the range of $27.06 to $68.16 over the past year.

ConocoPhillips (NYSE: COP) comes with an impressive 4% dividend yield, and it has a $44 billion market cap. The Houston-based oil and gas player has an implied upside of nearly 35% to the Goldman Sachs target of $56, but that target price is still not anywhere close to its recent highs.

ConocoPhillips stock was changing hands at $40.99. It has a consensus price target of $51.29 and a 52-week range of $20.84 to $67.13.


EOG Resources Inc. (NYSE: EOG) is worth nearly $30 billion, and while Goldman Sachs is above consensus, it is far from being the only firm that is very positive here. In fact, EOG recently received a very big upgrade by the SunTrust team, and it even made a list of 10 oil and gas stocks that would survive and still be thriving out in 2030. The Goldman Sachs target price of $70 implies nearly 40% upside, before considering nearly a 3% dividend yield.

EOG Resources was last seen at $50.05, with a 52-week range of $27.00 to $89.54. Analysts have a consensus price target of $63.67.

Marathon Petroleum Corp. (NYSE: MPC) may still be way down from its highs, but the $43 price target from Goldman Sachs implies upside of only about 10% from current levels. The $25 billion market cap is also accompanied by close to a 6% dividend yield. Marathon Petroleum has refining, midstream and retail stations and is based in Ohio, despite having operations in the Gulf Coast and West Coast regions, on top of its Mid-Continent operations.

Marathon Petroleum stock recently traded at $39.49, in a 52-week range of $15.26 to $69.65. The consensus price target is $46.93.

Pioneer Natural Resources Co. (NYSE: PXD) is well thought of by Goldman Sachs and other firms. It was also on the list of oil and gas companies that would survive and thrive out to 2030. The independent exploration and production company still is worth nearly $17 billion. The Goldman Sachs target price of $123.50 implies only about 10% upside, before considering its 2.1% dividend yield, but this stock is still down handily from its highs. Despite lower oil and gas price knocking earnings down handily, there is a general belief that Pioneer will remain quite profitable in its operations even with much lower revenues.

Pioneer Natural Resources stock was last trading at $101.80, with a consensus analyst target of $118.67. The stock has traded in the range of $48.62 to $159.01 over the past year.

Suncor Energy Inc. (NYSE: SU) has been on the conviction list for some time, but Goldman Sachs sees serious upside for this integrated oil company. The Canadian company is also a big oil sands player, and these are generally profitable when oil prices are higher. Goldman Sachs has a $24 target price here, which implies that its $26 billion market cap still has 37% upside, before considering the yield is above 3% for total return investors.

Suncor Energy stock was trading at $17.50 on Thursday. It has a 52-week range of $9.61 to $34.56.

First Solar Inc. (NASDAQ: FSLR) is of course not anywhere close to being an oil and gas stock, but its solar panels do make solar energy that competes against fossil fuels for energy. It also goes to show that Goldman Sachs isn’t just looking at the “dirty energy” sources, as the company has been targeting ever more renewable energy efforts. First Solar is still worth less than $7 billion, and the current price would suggest that Goldman Sachs will need to revisit its $65 target price. In other words, investors should expect

The oil and gas segment in energy has seen its shares of ups and downs in 2020. After what looked like a dead industry during the peak of the economic panic and pandemic-driven destruction demand, oil has at least come back to where fewer companies are facing existential risk. West Texas Intermediate crude came back above $40 a barrel in early June, and it has been hanging above $40 for most of July.

The research team at Goldman Sachs publishes many Buy and Sell ratings, but the most prized companies are generally referred to as Conviction Buy List stocks. These are the firm’s top ideas and are generally in mid-cap to large-cap companies. Goldman Sachs actually has seven oil and gas stocks on its Conviction Buy list, and it even has one solar stock.

Investors should always know never to use one firm’s research as a sole reason to buy or sell a stock. There are always other firms issuing coverage that coincides with or disagrees with a rating, and analysts can be wrong on their investment calls, just like investors can be wrong in their decisions.

The move to environmental, social and governance (ESG) themes has limited much of the interest in oil and gas stocks. After all, they are major sources of pollution, and many investment funds now have bans against investing in anything that is tied to fossil fuels. Still, Goldman Sachs believes all these energy stocks have considerable upside ahead.

24/7 Wall St. has provided some color on each call and compared the Goldman Sachs targets to the Refinitiv consensus analyst target prices to show whether there is really any stronger conviction than the average analyst expectations for the stock.

Baker Hughes Co. (NYSE: BKR) is one of the top oilfield services players out there, and Goldman Sachs has a $23 target price. This implies close to 41% upside from the current price, despite a drop in revenues being largely expected in 2020.

Baker Hughes stock was last seen at $16.31, in a 52-week range of $9.12 to $25.99. The consensus price target is $19.42.

Cheniere Energy Inc. (NYSEARCA: LNG) remains the top play for exporting liquefied natural gas to other countries. The company owns the Sabine Pass LNG terminal in Louisiana and the Corpus Christi LNG terminal in Texas, as well as interconnecting pipelines. The $71 price target at Goldman Sachs implies more than 40% upside, if its assumptions come true, but this stock has traded at $70 for only very brief periods since shares were much higher back in 2015.

Cheniere Energy stock was trading at $49.79, with a consensus price target of $65.80. The stock has traded in the range of $27.06 to $68.16 over the past year.

ConocoPhillips (NYSE: COP) comes with an impressive 4% dividend yield, and it has a $44 billion market cap. The Houston-based oil and gas player has an implied upside of nearly 35% to the Goldman Sachs target of $56, but that target price is still not anywhere close to its recent highs.

ConocoPhillips stock was changing hands at $40.99. It has a consensus price target of $51.29 and a 52-week range of $20.84 to $67.13.


EOG Resources Inc. (NYSE: EOG) is worth nearly $30 billion, and while Goldman Sachs is above consensus, it is far from being the only firm that is very positive here. In fact, EOG recently received a very big upgrade by the SunTrust team, and it even made a list of 10 oil and gas stocks that would survive and still be thriving out in 2030. The Goldman Sachs target price of $70 implies nearly 40% upside, before considering nearly a 3% dividend yield.

EOG Resources was last seen at $50.05, with a 52-week range of $27.00 to $89.54. Analysts have a consensus price target of $63.67.

Marathon Petroleum Corp. (NYSE: MPC) may still be way down from its highs, but the $43 price target from Goldman Sachs implies upside of only about 10% from current levels. The $25 billion market cap is also accompanied by close to a 6% dividend yield. Marathon Petroleum has refining, midstream and retail stations and is based in Ohio, despite having operations in the Gulf Coast and West Coast regions, on top of its Mid-Continent operations.

Marathon Petroleum stock recently traded at $39.49, in a 52-week range of $15.26 to $69.65. The consensus price target is $46.93.

Pioneer Natural Resources Co. (NYSE: PXD) is well thought of by Goldman Sachs and other firms. It was also on the list of oil and gas companies that would survive and thrive out to 2030. The independent exploration and production company still is worth nearly $17 billlion. The Goldman Sachs target price of $123.50 implies only about 10% upside, before considering its 2.1% dividend yield, but this stock is still down handily from its highs. Despite lower oil and gas price knocking earnings down handily, there is a general belief that Pioneer will remain quite profitable in its operations even with much lower revenues.

Pioneer Natural Resources stock was last trading at $101.80, with a consensus analyst price target of $118.67. The stock has traded in the range of $48.62 to $159.01 over the past year.

Suncor Energy Inc. (NYSE: SU) has been on the conviction list for some time, but Goldman Sachs sees serious upside for this integrated oil company. The Canadian company is also a big oil sands player, and these are generally profitable when oil prices are higher. Goldman Sachs has a $24 target price here, which implies that its $26 billion market cap still has 37% upside, before considering the yield is above 3% for total return investors.

Suncor Energy stock was trading at $17.50 on Thursday. It has a 52-week range of $9.61 to $34.56.

First Solar Inc. (NASDAQ: FSLR) is of course not anywhere close to being an oil and gas stock, but its solar panels do make solar energy that competes against fossil fuels for energy. It also goes to show that Goldman Sachs isn’t just looking at the “dirty energy” sources, as the company has been targeting ever more renewable energy efforts. First Solar is still worth less than $7 billion, and the current price would suggest that Goldman Sachs will need to revisit its $65 target price. In other words, investors should either expect a valuation downgrade or that Goldman Sachs will have to raise its target price based on whatever new information it sees.

First Solar stock was last seen at $62.59, with a 52-week range of $28.47 to $69.24. Analysts have a consensus price target of $55.98.

a valuation downgrade or they should expect that Goldman Sachs will have to raise its target price based on whatever new information they see.

First Solar stock was last seen at $62.59, with a 52-week range of $28.47 to $69.24. Analysts have a consensus price target of $55.98.

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