Deutsche Bank Raises Price Targets on Top Oil Stocks to Buy

With those caveats in mind, they are focusing on the fact that for reasonable growth, $70 per barrel is needed, as compared to benchmark West Texas Intermediate (WTI) trading right around $60 per barrel. The Deutsche Bank team raises price targets on top stocks to buy, and investors looking to own leading energy stocks can consider all of these as top companies.

Anadarko Petroleum

This company is one of the most widely recommended energy stocks from the firms we cover at 24/7 Wall St. Anadarko Petroleum Corp. (NYSE: APC) 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.

With the resolution of Tronox liabilities and the resulting tax adjustments, most on Wall Street expect the focus to shift back to the positive underlying operating trends and the potential for further monetization and sell-down of major assets this year.

Top Wall Street analysts see the company growing at or above 15% total production from the higher margin portions of their portfolio, which in turn could end up boosting the firm’s WTI price realizations. In other words, more oil equals more money.

Anadarko investors are paid a 1.3% dividend. The Deutsche Bank price target is raised from $96 to $100. The Thomson/First Call consensus estimate is at $102.09. Shares closed Monday at $83.84.

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Chevron

This stock is very solid story for investors looking to stay long the energy sector. Chevron Corp. (NYSE: CVX) sports a sizable divided, and has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG). Some Wall Street analysts estimate the company will have a compound annual growth rate of over 5% for the next five years, and the stock trades at a modest valuation discount to some of its mega-cap peers.

Chevron management is aggressively pursuing cost saving initiatives and has already completed over 2,200 supplier engagements with 700 more in progress. Cost savings and improving investor sentiment may be a key for the mega-cap integrated as it has struggled mightily over the past year.

Chevron investors are paid a large 4.15% dividend. The Deutsche Bank price target is raised to $125 from $120. The consensus is set at $113.99. Shares closed Monday at $102.63.
Devon Energy

This company is expected to have 48% or more of its total 2015 production in natural gas. Devon Energy Corp. (NYSE: DVN) is an independent driller primarily active in the United States. More than 70% of Devon’s U.S. reserves are in natural gas, with most of that lying in Texas’ Barnett Shale. The company plans to invest a total of more than $1.1 billion in the Eagle Ford shale and drill more than 200 wells. Daily production is just under 2 billion cubic feet. The company is also the second-largest oil producer among North American onshore independents, so this is a very balanced play for investors.

Devon’s extensive and very diversified portfolio is primarily composed of unconventional resources and reflects significant long-term growth potential. Consistent investments made by the company over time are helping it to sustain its strong performance despite, like many energy giants, having to lower exploration and production budgets for 2015.

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Devon investors are paid a 1.5% dividend. The Deutsche Bank price target is raised to $81 from $70. The consensus price target is lower at $75.09. Devon closed Monday at $64.47 per share.

Marathon Oil

This company is a leading integrated oil and gas firm with extensive upstream operations. Marathon Oil Corp. (NYSE: MRO) business is organized into three segments: North America Exploration and Production, International Exploration and Production, and Oil Sands Mining. The company has already projected that total 2015 capital expenditures will be about 20% or more below 2014 spending. Some Wall Street analysts think the number could be even greater, and some also do not expect any share repurchasing this year.

Top analysts cite the company’s higher multiple businesses, and the upstream cash margins have room to move up as shale production increases and oil prices recover. They also point out the stock trade at a very attractive discount to net asset value relative to industry peers.

Marathon investors are paid a 3.1% dividend. The Deutsche Bank target price is lowered to $35 from $37. The consensus target is posted at $32.86. The stock closed most recently at $27.09.

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Occidental Petroleum

This is another top energy stock that comes in as another high-yielding domestic pick in the sector. Occidental Petroleum Corp. (NYSE: OXY) announced last year it will continue to grow dividends and expects to begin buying back more shares this year and beyond, a double plus for shareholders. Analysts feel that the company still faces the rebounding oil price correction with the strongest balance sheet in the sector, with net cash at year-end 2014 they estimate at around $1.7 billion, and a whopping $11 per share of cash available for buy backs. With chemicals and other products helping to blunt the drop in oil, Occidental is well positioned to ride out the storm.

Short sellers, which had been leaning into the stock during the oil price decline, have started to get out as prices have poked back through $60 a barrel — way above of the low $40s hit back in January.

This is another company taking advantage of huge cost savings. In fact, capital expenditures are expected to fall from $1.7 billion to $1 billion by the end of the year.

Occidental shareholders are paid an outstanding 3.9% dividend. Deutsche Bank raises the stock to Buy from Hold, and the price target to $90 from $81. The consensus target is $85.58. The stock closed on Monday at $78.89.

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The Deutsche Bank team is being careful as they look for the best values in the sector. This makes good sense as many energy stocks have run since the bottom was put in late last year and early in 2015.