While most of Wall Street tends to agree that a full oil recovery could take years, many do agree that things should start to improve by next year and will be in far better shape by 2017. In a new report, Stifel takes a stand and advises investors to not wait for a perceived bottom in oil to start buying the top stocks in the sector.

Stifel makes the case that with non-OPEC production declining the most in 24 years, and demand expected to stay on the five-year average, the impetus is there for an oil price recovery. While they expect oil prices to stay range bound between $45 and $55 for up to 18 months, it is pointed out that large-cap exploration and production stocks tend to recover before oil prices do. In addition, the oil rig count is now down nearly as much as it was during the financial crisis.

The bottom line? The Stifel analysts feel that patient investors with a longer term view need to be buying stock now and not waiting for a perceived firm bottom to be in. It makes good sense, and prices may not get much better than they are now.

EOG Resources

This is a leading energy company that shows up well on the Jefferies screens. EOG Resources Inc. (NYSE: EOG) is the top producer in the Eagle Ford Shale and it has solid positions in both the Bakken and Permian Basin, making it a perfect fit for an integrated looking to expand in those areas should a purchase or merger make sense. EOG has come up in takeover chatter this year.

This is also a stock that hedge fund guru Kyle Bass owns. He is known for having an extremely keen eye when it comes to balance sheets, so it’s no surprise that this stock resides in the Hayman Capital portfolio.

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As of the end of last year, EOG reported total estimated net proved reserves of 2,497 million barrels (MMBbl) of oil equivalent, including 1,140 MMBbl crude oil and condensate reserves, 467 MMBbl natural gas liquid reserves and 5,343 billion cubic feet of natural gas reserves.

EOG investors are paid a small 0.92% dividend. The Stifel price target for the stock is $90, and the Thomson/First Call consensus price target is $95.34. Shares closed on Friday at $72.79.
Concho Resources

This company is one of the top energy plays in the Permian Basin in West Texas. Concho Resources Inc. (NYSE: CXO) is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The company also whispered to be a possible takeover candidate.

While second-quarter revenue numbers were less than Wall Street expected, and the company posted a net loss, adjusted earnings per share topped Wall Street expectations.

The Stifel price target is $126, but the consensus target is $137.55. Shares closed Friday at $100.96.

Cimarex Energy

Cimarex Energy Co. (NYSE: XEC) is an independent exploration and production company, and another top play for investors looking to the Permian Basin. The primary activities of the company are there and in the Mid-Continent area. Cimarex is focused on increasing shareholder value through strategies linked to generating attractive economic returns on capital employed and profitable growth in per-share reserves, production and cash flow. It intends to profitably grow reserves and production through a balanced mix of exploration, exploitation and acquisitions.

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Cimarex has a diversified base of high-quality production and attractive drilling opportunities, and it should be closing on a huge oil and gas asset sale soon. It should be noted that hedge fund gurus Steve Cohen and George Soros initiated sizable new positions in the company recently.

Investors are paid a small 0.6% dividend. The Stifel price target is $130, while the consensus target is $128.18. The shares closed Friday at $101.86.

Pioneer Natural Resources

Many Wall Street analysts love this stock as a pure crude oil play. Pioneer Natural Resources Co. (NYSE: PXD) was the ultimate shale-oil growth story for the past five years and has been eviscerated in the sell-off that started almost a year ago. The stock has s declined over 30% since April and could be offering aggressive investors a potential entry point that could be very timely.

Pioneer is a huge player in the Permian basin and the Eagle Ford in Texas, and it owns more than 20,000 locations in the world’s second largest oil reservoir in the Midland Basin. Some analysts think that the company could add rigs to the tune of up to two per month the rest of this year, and as many as eight rigs in the first quarter of next year.

Pioneer investors are paid a tiny 0.07% dividend. The Stifel price target is $140. The consensus figure is higher at $160.72. Pioneer closed trading on Friday at $122.34.

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There is still a long way to go for the energy sector, and the sledding may remain tough the rest of this year. Investors willing to carve out some capital and plan on holding positions for up to 18 months could be well rewarded.

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