Goldman Sachs analysts recently published their list of the top 40 undervalued stocks and 40% of them were energy-related. Chesapeake Energy Corp. was the only energy stock listed of 25 others “that people expect to fail.”
The firm’s recently published U.S. Monthly Chartbook included a list of stocks offering the most upside opportunity, 24-44%, relative to analysts’ price targets. Sixteen were either in energy production or produced energy equipment.
Halliburton Co., which was trading at about $34.69 when the report was published, offers a 44.1% upside, the highest energy stock on the list. National Oilwell Varco, another oilfield services giant, followed with a 39% upside. Marathon Petroleum Corp., which was spun off from Marathon Oil Corp., offered the third-best upside at 38.1%.
Williams, whose natural gas midstream and infrastructure operations stretch across North America and into the Gulf of Mexico, offers a 37.4% upside, according to Goldman.
Seven oil and gas domestic explorers followed, beginning with Anadarko Petroleum Corp. (34.6%); Devon Energy Corp. (32.6%), Southwestern Energy Co. 31.7%, Cabot Oil & Gas Corp (28.7%), Pioneer Natural Resources Corp. (27.2%), Marathon Oil (27.2%), and EOG Resources Inc. (25%).
Baker Hughes Inc. has a target upside of 24.9%, while Noble Energy Inc.’s target is 24.8%. Range Resources Corp. offers a 24.1% target, while Oneok Inc. offers an upside of 24%. Waste Management, which provides among other things recycling services that produce “green” energy, had a target of 24.5%.
Twenty-five stocks are among those that are being shorted, Goldman said.
In the No. 11 spot was Chesapeake, which had a one-year return at minus 24%, according to Goldman. It is being shorted at a rate of 14.04%.
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