Every day it seems like the same thing: falling oil prices and quality stocks getting murdered. Yet smart investors who have been around the Wall Street block, not attending their first rodeo, know that this is the best buying opportunity in 10 years. The question is which stocks do you buy? The answer is most likely big industry leaders who are prepared to fight through the downturn.

In a new research report, the Deutsche Bank analysts are clear where they stand. They maintain that while the timing of the recovery remains an unknown, they are now cautiously optimistic and see some small improvement in underlying crude balances, perhaps starting as early as next quarter.

While the analysts lower the prices on many of the stocks in their coverage universe, four look very attractive for patient investors now, and they actually raised targets on two. All four are rated Buy at Deutsche Bank.

Chevron

This is very solid story for investors looking to stay long the energy sector. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company, with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals. The company sports a sizable dividend and has a solid place in the sector when it comes to natural gas. Some Wall Street analysts estimate Chevron 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 more in progress. Cost savings and improving investor sentiment may be a key as the mega-cap integrated has struggled mightily over the past year. While many on Wall Street concede that the oil market could be oversupplied for longer than most thought, massive overseas demand and production slowdowns should help pricing this year.

Chevron’s Permian Basin assets are a goldmine, and the Australian liquefied natural gas business could transition from a yearly $8 billion capital consumption drag to a $2 billion to $3 billion contributor. That combined with the much lower overall capital spending for the 2016 to 2018 period, and the company is poised to not only hang around, but end the sector slump in a much better position.

Chevron investors receive a massive 5.16% dividend. The Deutsche Bank price target drops from $106 to $103. The Thomson/First Call consensus price target is $99.55.Shares closed on Thursday at $83.02.

Noble Energy

Deutsche Bank upgraded the stock to Buy, and many on Wall Street continue to expect growth as the company increased production guidance last year, without an increase in capital expenditures. Noble Energy Inc. (NYSE: NBL) is a global independent oil and natural gas exploration and production company with total proved reserves of 1.7 billion barrels of oil equivalent at year-end 2014 (pro forma for the Rosetta acquisition). The company’s diverse resource base includes positions in four premier unconventional U.S. onshore plays — the DJ Basin, Eagle Ford Shale, Delaware Basin and Marcellus Shale — and offshore in the Gulf of Mexico, Eastern Mediterranean and West Africa.

A recently announced large debt tender should dramatically increase the financial flexibility at Noble. Using a new three-year term loan agreement with seven lending institutions for a principal amount of up to $1.4 billion, the company announced tender offers for three separate debt issues. This could provide annual interest savings of up to $50 million and substantially enhance deleveraging flexibility.

Investors receive a 2.33% dividend. Deutsche Bank lifted its price target to $42 from $38, and the consensus target is $44.14. Nobel closed Thursday at $30.89.
Pioneer Natural Resources

Many Wall Street analysts love this stock as a pure crude oil play, and it recently was upgraded by Deutsche Bank and Citigroup. Pioneer Natural Resources Co. (NYSE: PXD) was the ultimate shale oil growth story for the past five years and has been eviscerated in the sell-off that started over a year ago. The stock rebounded nicely after last summer but was hit hard recently and could be offering aggressive investors a very timely entry point.

A huge player in the Permian basin and the Eagle Ford in Texas, Pioneer also owns more than 20,000 locations in the world’s second largest oil reservoir in the Midland Basin. Wall Street analysts were very positive on the third-quarter results and noted that the company reiterated annual production growth guidance of 15% or more while cutting the number of rigs expected to operate. With a stellar balance sheet and the new capital from a recent secondary offering, Pioneer is poised to remain the number one player in the Permian.

Lastly, speculation always swirls that the company could be a takeover target if a big integrated wanted to make a bold move into West Texas. Another reason suitors may be circling is the stock is trading over $100 lower per share from highs set in the summer of 2014.

Investors receive a tiny 0.07% dividend. The Deutsche Bank price target was raised from $150 to $160, and the consensus target is even higher at $165.21. Pioneer closed Thursday at $116.40.

Occidental Petroleum

This top energy stock is another one of the higher yielding domestic stocks in the sector. Occidental Petroleum Corp. (NYSE: OXY) is an international oil and gas exploration and production company with operations in the United States, Middle East region and Latin America. It is one of the largest U.S. oil and gas companies, based on equity market capitalization. Its midstream and marketing segment gathers, processes, transports, stores, purchases and markets hydrocarbons and other commodities in support of Occidental’s businesses. In addition, the wholly owned subsidiary OxyChem manufactures and markets chlor-alkali products and vinyls.

The company posted surprising third-quarter numbers that beat analyst expectations, and it announced that it would be leaving the Bakken shale after posting very heavy losses there.

Occidental also announced recently a deal with Ecopetrol to invest up to $2 billion over the next decade to increase production at the La Cira-Infantas oil field in Colombia. The new round of investments reportedly will increase production in the region by more than 200 million barrels.

Occidental shareholders receive an outstanding 4.67% dividend. The Deutsche Bank price target drops to $79 from $85. The consensus target is $79.92. Shares closed Thursday at $64.26.

While the beating these stocks took this week remains significant, they are probably now in the best range for investors considering buying shares. Remember, shares that are bought during irrational sell-offs are often the ones that bring the biggest upside return.

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