These are Wall Street’s most popular energy stocks during the oil rally
Oil prices hit their highest level in almost a year earlier this week. For investors looking to capitalize on this trend, here are some energy stocks with the greatest long-term upside potential. Energy is the only gaining sector in the S&P 500 this month, posting gains of about 2.6%. This week alone, the sector gained 0.5% as oil prices rose on news of extended voluntary oil supply cuts from Saudi Arabia and Russia until the end of this year. CNBC Pro used FactSet data to look for energy companies in the S&P 500 that not only benefit from a rise in oil prices but are also popular with analysts. We looked for stocks that are rated Buy by more than 60% of the analysts covering them and are expected to have more than 10% upside potential over the next 12 months based on the analyst consensus price target. Here are the stocks that made the cut: Marathon Oil and Texas-based natural gas infrastructure company Targa Resources are the clear energy winners in the broader index, up 21.5% and 20.5%, respectively, according to analysts. Almost two-thirds of analysts recommend buying Marathon Oil. The stock, which gained nearly 17% this quarter, was also the most closely correlated stock to oil in the Russell 1000, according to a recent CNBC Pro reading. Halliburton was the second most popular stock for Targa, with 80% of analysts rating the oilfield services giant as Buy. Of that list, the stock is the biggest gainer of the year so far this quarter — up more than 24%. Another name on the list is oil and natural gas company Diamondback Energy. About 77% of analysts rate the stock a Buy, with their average price target implying more than 11% upside potential. Shares are up about 18% this quarter. Earlier this week, Diamondback subsidiary Viper Energy Partners announced that it was acquiring certain mineral and royalty interests from affiliates of Warwick Capital Partners and GRP Energy Capital for approximately $1 billion in cash and stock. The deal gives the company approximately 4,600 net royalty acres in the Permian Basin and an additional 2,700 net royalty acres in other major basins. Natural gas producer EQT, oil and gas giant EOG Resources and petroleum refining and marketing company Valero Energy are also Wall Street favorites. Mizuho Securities analyst Nitin Kumar highlighted Valero and EQT as “important picks” in a June note, adding that they “perform well on our force ranking system, which we call the Energy Investment Framework.” More than 62% of analysts gave EQT a buy rating, expecting the company to rise nearly 15%. Although the stock gained less than 2% this quarter, it is the winner of the list in terms of year-to-date gains, up about 24% in 2023. For investors looking for energy stocks but don’t want to bet on individual names, the Energy Select Sector SPDR Fund (XLE) and the iShares US Energy ETF (IYE) track companies in the sector. XLE has an expense ratio of 0.1% and a total return of more than 6% in 2023. IYE has an expense ratio of 0.4% and a total return of 4.6% year to date. – CNBC’s Michael Bloom contributed to this story.
https://www.cnbc.com/2023/09/07/these-are-wall-streets-favorite-energy-stocks-as-oil-rallies.html These are Wall Street’s most popular energy stocks during the oil rally
