Most of the mega-cap oil names posted very poor fourth-quarter numbers, and the door of opportunity for investors who want to own these top names may be wide open. While Wall Street has been busy keeping a close eye on rising natural gas prices, which have been at and above $5 for the first time in years, West Texas Intermediate (WTI) crude is now back over $100. This double header of good news for the big boys may mean huge earnings gains in 2014 and beyond.

In a new research report, the energy analysts at Cowen point out that after three years of disappointment, 2014 is expected to represent a year of stabilization/moderate growth — with potential for meaningful ramp up in the 2015 to 2018 timeframe. Confirmation of this view should be a positive for the group, and Cowen’s top stocks to buy. While the analysts are only super aggressive on one specific name, all three offer investors solid upside

Occidental Petroleum Corp. (NYSE: OXY) had a huge day last Friday when it announced that it would spin off its California assets into a separate company. Occidental has faced calls from Wall Street and activist investors to split its U.S. business from its international operations, with analysts valuing the assets at between $19 billion to $22 billion. The fact that the company is not an integrated is seen as a huge positive. Without refining or midstream operations, independent exploration and production majors like Occidental will see the full benefit of rising oil prices in their future results. In an unlikely, but not out of the question, that the company could also be a takeover target, though it would come with a very steep price tag. Investors also receive a very solid 3% dividend. The Cowen price target for the stock is $110. The Thomson/First Call estimate is $106.60. Occidental closed Tuesday at $96.28.

Chevron Corp. (NYSE: CVX) is a top integrated name that the Cowen team is bullish on. The company has maintained a decent lead in unit upstream profitability. That is figured as net income per barrel of oil equivalent. While the lead is expected to be maintained, the Cowen analysts are interested in hearing commentary on further improvement due to better project mix. They feel that investments in mega projects’ “unproductive capital” have lowered near-term returns. Plus, there is a general sense of Wall Street malaise around the stock. The kind of malaise that long-term, patient investors building a blue chip portfolio can take advantage of. The Cowen analysts point out that while they like the stock, they are patient buyers. Investors can scale in partial buys as they build a position. Chevron pays investors a very good 3.5% dividend. The Cowen price target is $133, and the consensus target is $129.73. Chevron closed Tuesday at $112.71.

Exxon Mobil Corp. (NYSE: XOM) unit profitability has started to improve, although it is still below Chevron’s. With incremental growth coming from liquids/liquid-linked output, the Cowen analysts expect margin expansion in coming years. Improvement in Henry Hub prices should also help profitability in 2014. ExxonMobil’s profits fell 27% last year, due mostly to such poor performance in its downstream unit. Therefore, even if oil prices rise significantly and help to boost upstream profitability, ExxonMobil’s conservative production strategy and huge downstream operations may blunt the positive impacts of higher domestic oil prices. The Cowen team also thinks that capital expenditures for the energy behemoth will start to drop after this year, and that will immediately help overall profitability in the future. The company pays its shareholders a very respectable 2.7% dividend. The Cowen price target is $111, and the consensus is at a much lower $99.53. Exxon closed Tuesday at $94.07.

Big oil stocks have been in the Wall Street doghouse for quite some time. The good thing for investors is this is a much safer contrarian type trade, especially with the price of oil and gas at recent highs. For more conservative accounts, all three of these names are very solid ones to add. Long term, they should bring solid total return and reasonably low volatility to a well-rounded portfolio.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.