Investors have to be thrilled that the Dow Jones Industrial Average, the S&P 500 and the Nasdaq 100 are all trading right at all-time highs. Even with some of the market’s favorite stocks seeing sharp corrections on Friday, there are always other areas that haven’t participated as much in the rally that has continued this year.
The bull market is well over eight years old, and the market indexes have now risen exponentially since the lows in 2009. Some investors have started feeling confused or puzzled about the relentless stock market strength, particularly after investors have managed to find myriad reasons to keep buying stocks after each and every sell-off.
With valuations being high and as many investors are trained to be cautious in the summer, some investors are looking for new ideas and safety as they still seek positive returns. Is it possible that the energy sector, particularly oil and gas, could be hiding some serious value?
It is important to realize that crude oil’s strength and recovery has backed off in 2017. OPEC’s production cuts being extended may not really be met, or maybe the market just wanted more. And rig counts keep rising to add more supply ahead. West Texas Intermediate crude closed at $45.83 on Friday, and it had struggled to hold above $50 up until recently. The firm Tudor Pickering recently warned that North American shale producers really need oil to be $55 per barrel to be profitable in general, even if $45 is still profitable in some of the shale plays.
24/7 Wall St. reviews dozens of analyst research reports each day of the week to find new investing and trading ideas for its readers. This ends up being hundreds of analyst calls each week. Some of these analyst reports covering stocks to buy during the week of June 5 to June 9 were in key oil and gas companies.
Investors should never just blindly trust analyst calls. They can be wrong or poorly timed, but it is worth noting that many key oil stocks are closer to the lows of 2016 and are trading like they were back when oil was challenging $30 per barrel again. That could imply a disconnect, even if perhaps the prices of oil stocks recovered more than they should have during the oil price recovery.
Consensus analyst price target data are the mean of the Thomson Reuters sell-side research service. Additional color and commentary has been added on most of the daily analyst calls. Here are some of the top calls in energy stocks from this past week.
Cabot Oil & Gas Corp. (NYSE: COG) was raised to Outperform from Neutral on June 6 at Macquarie. The stock closed out the week with a 2.5% gain on Friday to $22.88, and that compares with a closing price of $21.50 a day before Macquarie raised its rating. Cabot has a 52-week trading range of $20.02 to $26.74 and a consensus analyst target price of $29.28.
On June 5, Chevron Corp. (NYSE: CVX) was raised to Buy from Hold at HSBC. Chevron had closed down 1.1% at $103.11 ahead of that call, and it has a 52-week range of $97.53 to $119.00. Shares closed up 2.3% at $106.40 on Friday. The Dow component has a consensus target price of $123.35.