Can anything look bleaker for the oil sector, despite Wednesday’s big FOMC-inspired rally? Oil supplies are at generational highs, the price of oil is at eight-year lows and threatening to go lower, natural gas prices are weak and oil and gas companies are cutting capital spending and jobs where they can. In short, everything looks totally negative in the oil and gas sector. That does not mean that all oil stocks will continue linger just on bad news. According to Stifel, now is the time for investors to strongly consider buying some quality energy stocks. Stifel has also said that the potential reward for those willing to make the tough call to buy stock now is significant.

A Stifel research note points out some solid reasons for taking the oil plunge now, even if it is just partial positions. They think investors need to look past current weak fundamentals and for an oil price rebound combined with lower industry costs. They also cite the recent narrowing of Saudi crude price discounts to Asian buyers, slowing U.S. crude production growth and declining consensus production estimates.

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We scanned the Stifel list of stocks to buy with strong assets and/or balance sheets that will help them survive protracted lower prices and found five that look very attractive: Anadarko Petroleum Corp. (NYSE: APC), Concho Resources Inc. (NYSE: CXO), EOG Resources Inc. (NYSE: EOG), Noble Energy Inc. (NYSE: NBL) and Whiting Petroleum Corp. (NYSE: WLL).

Anadarko Petroleum

Anadarko Petroleum is one of the biggest independent oil and gas producers in the country, with exploration or production work in all major domestic drilling areas, as well as in South America, Africa, Asia and New Zealand. The company has also consistently ranked high with many firms that we cover on Wall Street. Anadarko announced last year discoveries off the western and eastern coasts of Africa, including natural gas discoveries in Mozambique and oil discoveries in Ghana. The company is also among the 14 firms teaming up to lobby an end to the ban on U.S. energy exports.

The company recently announced a partnership with industry peers to build the Saddlehorn Pipeline in Colorado. Many have long thought Anadarko to be an attractive takeover target.

Anadarko investors are paid a 1.31% dividend. Stifel has a $105 price target for the stock. The Thomson/First Call consensus price target is at $96.48. Shares closed Wednesday at $82.59.

Concho Resources

Concho Resources is one of the top energy plays in the Permian Basin in West Texas. The company is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. It also may be a possible takeover candidate. Concho completed a successful secondary stock offering earlier this month, which raised close to $650 million. Proceeds from the offering are expected to be used to repay all outstanding borrowings under the company’s credit facility and for general corporate purposes, which may include funding the company’s drilling and development program and future acquisitions.

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Concho posted strong fourth-quarter results that beat estimates, and it remains one of the best run independent exploration and production companies for investors to consider.

The Stifel price target is $134, and the consensus target is $126.75. Shares closed Wednesday at $107.40 apiece.

EOG Resources

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. In fact, industry chatter online and off picked up in late February that Norway’s Statoil was targeting EOG in a merger or acquisition that could exceed $50 billion.

As of the end of last year, the company reported it had total estimated net proved reserves of 2,497 million barrels of oil equivalent, including 1,140 million barrels (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 0.8% dividend. The Stifel price target $110, and the consensus target is $100.34. Shares closed on Wednesday at $90.66, up over 4%.

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Noble Energy

Noble is a top stock to buy that has the majority of its production in the form of natural gas, and that certainly helps to hedge against falling oil prices, especially when we have brutal winters and very hot summers. Noble is also one of the many American firms expected to benefit when Mexico opens the door for exploration and production from outside companies for the first time in 70 years.

The company is also expected to declare its Aphrodite natural gas reserve off Cyprus commercially viable within weeks. Cyprus discovered offshore gas in 2011 and is seeking to develop the energy sector to bolster an economy that relies mostly on tourism, business services and shipping.

Noble investors are paid a 1.6% dividend. The Stifel price target is $65, and the consensus figure is $55.23. Shares closed trading Wednesday at $48.12.

Whiting Petroleum

Whiting Petroleum is North Dakota’s largest oil producer. It has recently put Texas acreage and pipeline assets up for sale. That new strategy may be an effort to appease some investors outraged by the possibility of any outright sale. Wall Street analysts feel that the company could dispose of assets that are not key to the core shale operations and generate cash for the company’s balance sheet. Whiting is burdened by more than $3 billion in debt after December’s buyout of smaller rival Kodiak Oil & Gas.

The Stifel price target is set at $45, and the consensus target is $45.97. The stock closed Wednesday at $40.95 a share.

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While is does take some courage to buy these top oils stocks now, another investor attribute that will be needed is patience. Even if the market does bottom soon, it will take time for the oil and gas sector to regain some health. Investors buying here should probably be thinking about a longer-term view of 12 months to 18 months, and many investors should consider legging in gradually rather than piling in all at once. Some analysts and speculators try to call a bottom in many trends. Jumping in all at once is a dangerous game — akin to catching falling knives.

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