After a nice run off the lows earlier this year, the price of oil seems to be hitting a roadblock around the $60 level, and it appears that, barring an international incident, it may be stuck there for a while. In a new research report, SunTrust Robinson Humphrey remains vocal in its positive view of the Permian Basin in West Texas. It has three top stocks to buy now.

The SunTrust team feels that some parts of the Permian have the best well returns in the United States. With a much lower benchmark price than this time just one year ago, well returns become a very crucial metric. Three top companies are among the analyst’s favorite nearer-term plays. All are rated Buy

Diamondback Energy

This stock remains a favorite of the SunTrust analysts, and with good reason. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company headquartered in Midland, Texas, focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin. Diamondback’s activities are primarily focused on the horizontal exploitation of multiple intervals within the Wolfcamp, Spraberry, Clearfork and Cline formations.

SunTrust cites the company’s top-tier asset base, solid accretive additions and financial discipline, which the firm thinks allows for not only continued solid cash flow, but could put the company in play as a takeover target. It also notes that Diamondback continues to drill some of the most economical wells in the United States as efficiencies improve, costs decrease and activity remains in the better regions.

SunTrust’s price target on the stock is $90. The Thomson/First Call consensus price target is $86.46. The shares closed Thursday at $77.09.

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Energen

This oil and gas exploration and production company with headquarters in Birmingham, Ala., is another top near-term favorite at SunTrust. Energen Corp. (NYSE: EGN) has 1.1 billion barrels of oil-equivalent proved, probable and possible reserves and another 2.2 billion barrels of oil-equivalent contingent resources. These all-domestic reserves and resources are located primarily in the Permian Basin. The company actually has been active in the region since the late 1960s and has made numerous major acquisitions in the past five years.

The company posted solid third-quarter numbers recently and may be ready to lift-off from here. In addition, Wall Street has applauded that Energen expects to carry just $800 million in net debt this year, which is a relatively small amount for $4.5 billion oil company. It has used asset sales to reduce corporate debt instead of using all the cash proceeds for production growth. Last year the company sold its legacy natural gas distribution business, Alagasco, for $1.6 billion, while more recently it sold $384 million in natural gas properties in the San Juan Basin. In both cases those funds were largely used to reduce debt.

The $70 SunTrust price target is higher than the consensus target of $67.14. Shares closed Thursday at $59.76.

Pioneer Natural Resources

Many Wall Street analysts love this stock as a pure crude oil play. Pioneer Natural Resources Co. (NYSE: PXD) was the ultimate shale-oil growth story for the past five years, but it was eviscerated in the sell-off that started over a year ago. The stock has rebounded nicely since the summer but is still down almost 20% since April, and it could be offering aggressive investors a potential entry point that could be very timely.

Pioneer is a huge player in the Permian basin and the Eagle Ford in Texas, and the company owns more than 20,000 locations in the world’s second largest oil reservoir in the Midland Basin. SunTrust was very positive on the third-quarter results and noted that the company reiterated annual production growth guidance of more than 15% while cutting the number of rigs expected to operate.

Pioneer investors receive a tiny 0.0% dividend. The SunTrust price target is $176, and the consensus figure is lower at $166.08. Pioneer closed trading on Friday at $145.42.

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There is still a long way to go for the energy sector, and the sledding may remain tough the rest of this year and in 2016. Investors willing to carve out some capital and plan on holding positions for up to 18 months could be well rewarded.

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