Oil prices continue to rally. “We are moving into a world where you have lower inventories, lower spare capacity and less protection for buyers,” says John Driscoll, chief strategist at JTD Energy Services. “So $100 a barrel has become more likely, whether we get there or not, it might be a little early to say,” he told CNBC on Monday. This is on the back of US sanctions on Iran due to kick in next month.
What you need to know: since its inception in February 2013, the RBC Global Energy Best Ideas List is up 36.7% compared to the S&P Global Energy Sector’s ETF at 4.2%.
If we use TipRanks data to dive into the firm’s latest list, these 3 stocks look extremely promising. As you will see, all the stocks below share a ‘Buy’ Street consensus.
Here are 3 of the firm’s best energy stock ideas vs 2 stocks that no longer make the cut:
Encana Corp (ECA)
For Gregory Pardy (Track Record & Ratings), his best idea is Encana Corporation. This is a company which produces, transports and markets natural gas, oil and natural gas liquids. This is the company with the best real estate on the block cheers Pardy. His price target: $16 (20% upside potential).
“We believe that Encana has some of the best real estate on the block when it comes to North American resource plays and possesses solid execution capability.” This includes both the Permian and Montney, along with the Duvernay and Eagle Ford.
At this point in the game, execution is key. This means its main catalysts revolve around consistently meeting quarterly production and capital spending guidance. “Our bullish stance towards Encana Corporation is predicated upon successful delivery of its five-year growth+ margin expansion plan” he concludes.
And as we can see here, the Street clearly shares Pardy’s bullish take on the stock:
Energy Transfer Eq (ETE)
Elvira Scotto (Track Record & Ratings), one of the Top 100 analysts on TipRanks, is betting on the fortunes of Energy Transfer. She sees the stock surging 32% to hit $23. Energy Transfer Equities is about to merge with its affiliated master limited partnership Energy Transfer Partners LP (ETP)– and Scotto sees this as a savvy move.
“We continue to view the proposed ETP/ETE simplification transaction positively, and believe the pro-forma entity will have a better cost of capital and the ability to self-fund growth capex” she says. And according to Scotto, ETE is on track to achieve its leverage targets by ramping cash flows and reducing debt.
What’s more, Scotto expects the resulting entity to “continue to benefit from growing crude oil production in the United States given its well positioned asset base.” With six consecutive buy ratings, it isn’t just Scotto calling the bull-story on this energy powerhouse. See what other Top Analysts are saying about ETE.
Oaklahoma-based Oneok is our third hot stock on the Global Energy Best Ideas List. The diversified energy company has presence in the SCOOP, the Williston Basin and the Permian Basin. Scotto believes these resources “provide high-return growth opportunities.”
She has a $79 price target on the stock (15% upside potential). Alongside this attractive asset base, Scotto notes three other key reasons in the stock’s favor. Namely: 1) a robust project backlog; 2) stable cash flows 3) no equity needs due to an improved balance sheet.
Specifically, in 2018 YTD, OKE has announced $3.7BN of growth projects with additional expansion opportunities. See what other Top Analysts are saying about OKE.
But say goodbye to:
Phillips 66 Partners (PSXP): “We are removing PSXP from the best ideas in favor of Energy Transfer Equity, L.P” explains Scotto. Both the companies cover pipeline transportation for natural gas.
Halliburton (HAL): One of the world’s largest oil field service companies, Halliburton is removed from the list due to frac exposure.
All the Street’s hottest stocks ideas
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