What a nice rally energy investors have experienced since the lows that were printed in early February. It seems almost funny in retrospect that with oil at $26 there were skeptics calling for a move to $20 or lower, when as we now know it has almost doubled to the $50 mark. However, with that big move in the spot price, there have been some big moves in stock prices, and some are now getting more expensive than others.

A new RBC research report makes the interesting point that the senior exploration and production (E&P), or larger cap, companies are currently trading at an average debt-adjusted cash flow multiple of 14 times, versus 13.2 times for the smaller intermediate E&Ps. It makes sense that investors looking for value may want to go smaller.

We screened the RBC intermediate E&P universe and found four rated Outperform that look good now.

Gulfport Energy

This is one of the favorites around Wall Street among the smaller more nimble companies, and it is also a member of the Jefferies Franchise Picks portfolio. Gulfport Energy Corp. (NASDAQ: GPOR) is an independent oil and natural gas exploration and production company with its principal producing properties located in the Utica Shale of eastern Ohio and along the Louisiana Gulf Coast. In addition, Gulfport holds a sizable acreage position in the Alberta Oil Sands in Canada through its 24.9% interest in Grizzly Oil Sands.

Gulfport is a favorite of hedge fund managers. In fact, according to Insider Monkey, 36 hedge funds owned positions in the stock late last year. The shares hit some weakness on gas prices and a lower growth outlook, a move lower many believe is overdone and recent stock movement seems to have confirmed. With a multiple in line with peers and an expected ramp-up in production this year, the stock may be a great value at current levels, despite last week’s big rally.

The RBC price target for the stock is $34, and the Thomson/First Call consensus price target is $34.43. The stock closed Friday at $32.69 per share.
Parsley Energy

This is smaller capitalization stock for aggressive investors to consider. Parsley Energy Inc. (NYSE: PE) is an independent oil and natural gas company that engages in the acquisition, development, production, exploration and sale of crude oil and natural gas properties in the Permian Basin located in West Texas and Southeastern New Mexico.

As of December 31, 2015, its acreage position consisted of 110,967 net acres, including 84,441 net acres in the Midland Basin and 26,526 net acres in the Delaware Basin, as well as estimated proved oil and natural gas reserves were 123.8 million barrels of oil equivalent.

The company posted solid first-quarter results that beat expectations. In addition Parsley Energy’s wells in the Southern Delaware are tracking above expectations, and results from Midland are also looking very impressive.

The RBC price target for the stock is posted at $28, and the consensus is set at $29.89. Shares closed Friday at $26.53.

Rice Energy

This company recently has started to catch some upgrades around Wall Street. Rice Energy Inc. (NASDAQ: RICE) an independent natural gas and oil company, engaged in the acquisition, exploration and development of natural gas, oil and natural gas liquid (NGL) properties in the Appalachian Basin. The company operates through two segments, Exploration and Production, and Midstream.

As of December 31, 2014, it held approximately 86,000 net acres in the southwestern core of the Marcellus Shale, Pennsylvania, and approximately 55,000 net acres in the southeastern core of the Utica Shale located in Belmont County, Ohio.

Some on Wall Street see the company as a solid takeover candidate and see the potential for 20% or more growth over the next few years. Analysts have also cited the fact that the midstream asset portfolio provides balance sheet flexibility, and they think that a capital outspend will be required through 2017 to achieve 20% growth.

RBC has a $19 price target for the stock, and the consensus price objective is set at $22.39. Shares closed Friday at $20.58.

RSP Permian

This company was one of the production growth leaders in the last half of 2015 and into 2016. RSP Permian Inc. (NYSE: RSPP) is an independent oil and natural gas company focused on the acquisition, exploration, development and production of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin of West Texas. The vast majority of the company’s acreage is located on large, contiguous acreage blocks in the core of the Midland Basin, a sub-basin of the Permian Basin.

The company has caught a string of upgrades from top Wall Street companies during the spring, and many have pointed to the possibility that the company may very well also be a potential takeover candidate.

The RBC price target is set at $36, and the consensus figure is $37.18. The stock closed most recently at $33.74 per share.

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Given the potential for market volatility this summer, and the fact that the spot price and stocks have run big, it may be wise for investors to initiate smaller partial positions now and look for a pullback to be more aggressive in adding shares.

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