With the market consistently hitting all-time highs, many investors are having a hard time finding stocks and sectors that still offer value. While there are some exceptions, one of the cheapest sectors by far is energy, which has underperformed the entire year. While some of the mega cap integrateds have bounced nicely off their early summer lows, others in the sector are offering solid value now.

In a new research report, RBC updates performance numbers and makes some addition and deletions to the Global Energy Best Ideas portfolio. The analysts noted this in the report:

In September, the RBC Global Energy Best Ideas List was up 9.7% compared to the S&P Global Energy Sector’s increase of 8.9%. Since its inception in February 2013, the RBC Global Energy Best Ideas List is up 16.9% compared to the S&P Global Energy Sector ETF at -5.9%.

RBC is known as a firm that excels in energy coverage, so we screened the portfolio for top U.S.-based exploration and production and oil services stocks. We found four that make sense for investors looking to add or increase energy holdings.

Devon Energy

This company was a summertime addition to the RBC list. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs) in the United States and Canada. It operates approximately 19,000 wells. The company also offers midstream energy services, including gathering, transmission, processing, fractionation and marketing to producers of natural gas, NGLs, crude oil and condensate through its natural gas pipelines, plants and treatment facilities.

The analysts noted this upon the company’s addition to the portfolio:

Devon trades at a 10% discount on EV/EBITDA to large cap peers despite similar Oil growth rates in 2018. Activity in the Delaware, STACK, and Eagleford should help the company return to growth in the second half of 2017 and we think there could be upside to 2017 production expectations. We expect 8% production growth in 2018 led by high margin US oil production up 15-20%. DVN plans to divest assets worth $1 billion that are non-core, including portions of the Barnett Shale, with an anticipated sale occurring in the next 12–18 months. Proceeds will further enhance the balance sheet but also provide capital to continue to accelerate growth in 2018+, in our view.

Devon investors are paid a 0.78% dividend. The RBC price target for the stock is $43, and the Wall Street consensus target is $40.55. The shares traded early Wednesday at $35.95.

Halliburton

This company is still down almost 25% from highs printed for this year in January, and it remains a top large cap oil services pick at RBC. Halliburton Co. (NYSE: HAL) is one of the world’s largest providers of products and services to the energy industry. It serves the upstream oil and gas industry throughout the life cycle of the reservoir, from locating hydrocarbons and managing geological data to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field.

Halliburton is the second-largest provider of oil services and the number one player in pressure pumping services worldwide. For investors looking for an oilfield services company to add, this is arguably the best, and analysts feel it will be a huge benefactor as the frac market has tightened significantly and prices are 20% to 30% off the lows.

The company posted solid second-quarter results, and analysts were encouraged by Halliburton’s restraint regarding frac newbuild equipment and believe the recent reset somewhat derisks smid-cap frac prints and the company’s full third-quarter frac schedule suggests runway for others in the oilfield services arena.

Halliburton shareholders are paid a 1.6% dividend. The $60 RBC price target is higher than the consensus target of $54.06. The shares were last seen trading at $44.75.

Patterson-UTI Energy

This company could see meaningful business coming from Canada this year. Patterson-UTI Energy Inc. (NASDAQ: PTEN) is the second largest land driller in North America and a large pressure pumping provider. Its operations are particularly focused in the Marcellus and in Texas.

Patterson-UTI and its subsidiaries operate land-based drilling rigs in oil and natural gas producing regions of the continental United States and western Canada. Universal Pressure Pumping, and Universal Well Services provide pressure pumping services primarily in Texas and the Appalachian region. For three months ended September 30, 2017, the company had an average of 161 drilling rigs operating.

Investors receive a small 0.4% dividend. RBC has a $29 price objective, and the consensus figure is $24.63. The shares traded at $20.65 on Wednesday.

RSP Permian

This was another recent addition to the RBC Global Energy Best Ideas list. 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 subbasin of the Permian Basin.

The company caught a string of upgrades from top Wall Street companies last year and many have pointed to the possibility that the company may be a potential takeover candidate. Historically a vertical producer, the company has been transitioning to horizontal drilling the past few years. RSP Permian has conducted five acquisitions since its initial public offering in early 2014 and currently has 1,700 horizontal locations across eight prospective zones.

An RBC report noted:

RSP Permian trades in line (EV/EBITDA) to Permian peers but has one of the best debt-adjusted production growth outlooks in the peer group. The company’s margins are also amongst the top in the industry. There is visibility for over 30% growth in 2018 at cash flow levels assuming at least $55 per barrel. However, we think the company will be proactive and target near cash flow neutrality and remain disciplined if oil prices remain below $50/bbl. We see further upside to our valuation through improving capital efficiency in the Delaware and expanding resource potential in the Midland.

The RBC price target is $43. The consensus target is $44.54, and the stock was trading at $34.40 a share.

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These four top companies that all have decent upside to the RBC price targets. With earnings reports coming up, it may make sense to buy partial positions now and wait for the results before adding additional shares.

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