Energy and Financials May Have Biggest Potential Upside: 5 Top Buys for 2021


This top mid/large-cap pick is still down a stunning 35% this year, and the company could be a takeover target. Hess Corp. (NYSE: HES) is an exploration and production company that develops, produces, purchases, transports and sells crude oil, NGLs and natural gas. It primarily operates in the United States, Denmark, Equatorial Guinea, the Joint Development Area of Malaysia/Thailand, Malaysia and Norway.

The company continues to make solid discoveries globally, and the analysts noted this:

2 more discoveries at Redtail & Yellowtail 2 looked passed over by the market – but incremental exploration success has value. In our view, it offers low cost tieback opportunities. Including just two at Liza 2 and Payara and our price objective moves up. At current levels, value dislocation looks unsustainable with Hess having just scratched the surface of exploration potential.

Holders of Hess stock receive a 2.25% dividend. The stunning $70 BofA price target compares to the $58.27 consensus figure and the most recent close at $44.25.

Pioneer Natural Resources

Many Wall Street analysts love this stock for a pure crude oil play. Pioneer Natural Resources Co. (NYSE: PXD) operates a modern fleet of more than 24 top performing drilling rigs throughout onshore oil and gas producing regions of the United States and Colombia. Pioneer production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.

Pioneer is a huge player in the Permian Basin and in the Eagle Ford in Texas, and the company owns more than 20,000 locations in the world’s second-largest oil reservoir in the Midland Basin. With updated 2020 and 2021 hedging adding $1.2 billion to cash flow estimates over next two years, a new $900 million credit facility further enhances liquidity. In addition, the Gulf coast marketing makes Pioneer less exposed to widening Midland differentials.

Top Wall Street analysts feel that by owning Pioneer, investors have access to a Permian growth and a free-cash-flow story, but with better asset level and corporate level operating/financial metrics. Some also feel that Pioneer could have an improved dividend if the cycle improves given the introduction of its variable dividend framework.

Investors receive a 2.26% dividend. The BofA Securities price target is $122. The consensus figure is higher at $132.67, but Pioneer stock closed most recently at $97.08.

SVB Financial

This boutique financial services firm may be off many investors’ radar screens. SVB Financial Group (NASDAQ: SIVB) is a financial holding company that serves companies in the technology, life science, venture capital, private equity and premium wine industries, offering diversified financial services such as commercial, investment, international and private banking. Headquartered in Santa Clara, California, the company operates through offices in the United States and international operations in China, India, Israel and the United Kingdom.

Wall Street analysts have raised the third-quarter earnings estimate to $4.04 per share up from the previous consensus forecast of $3.97 per share, as well as the full-year estimate for 2020 to $14.46 per share from the previous $14.38 per share.

BofA Securities has set a $275 price target. The consensus target is $250.13, and Thursday’s closing print for SVB Financial stock was $245.91.

These five stocks are about as far away from momentum as you can get, and now it may not be a bad idea to give them all a hard look. Financials have been crushed, and here you have a leading money center bank and a boutique stalwart. Oil was up well over 7% this week on the shut-ins in the Gulf of Mexico and some supply improvements. The three energy ideas are some of the best names in the sector with little current downside.

Sponsored: Find a Qualified Financial Advisor

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.