For well over a year, we have covered the energy analyst research team at Goldman Sachs as they continued to make the case for higher oil prices. While many on Wall Street shrugged, they held their ground. The one handcuff the United States could have had on Russia was energy, but the Biden administration discouraged fossil fuel production by shutting down the Keystone pipeline and not allowing permits to drill on federal land and in the Gulf of Mexico. So, one sanction they don’t have in their diplomatic quiver is halting Russian energy exports to Europe. Now, with the dogs of war on the screen near term, the biggest issue may be production for the longer term.
Due to the administration’s policies, many of the top energy companies have focused on shareholder returns, like dividends share buybacks, and on free cash flow. With West Texas Intermediate crude over $90 a barrel, though, you can bet that some wells are being fired back up, but it will be nowhere near the expected demand going forward for oil and especially for natural gas and liquefied natural gas.
We screened the Goldman Sachs energy research universe looking for companies that are rated Buy and pay solid and big dependable dividends. We found five top ideas that still make sense for growth and income investors. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decisions.
This is one of the premier European integrated oil giants, and Goldman Sachs has it on the firm’s Conviction List of top stock picks. BP PLC (NYSE: BP) engages in the energy business worldwide. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture, usage and storage.
The company is also involved in the convenience and mobility business, which manages the sale of fuels to wholesale and retail customers, convenience products, aviation fuels, and Castrol lubricants. It is involved in refining, supply and trading of oil products, as well as operation of electric vehicle charging facilities. In addition, it produces and refines oil and gas, and it invests in upstream, downstream and alternative energy companies, as well as in advanced mobility, bio and low carbon products, carbon management, digital transformation and power and storage areas.
Shareholders receive a 4.22% yield. The Goldman Sachs price target for U.S.-traded shares of BP stock is $50, well above the $37.72 consensus target. The final trade Friday was reported at $30.73.
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