If there was a no-brainer call this past week it was that the OPEC poohbahs would get nothing done at Doha during their recent get together to discuss oil prices. With an unrepentant Iran returning to the market at all costs, and also being a no-show, and the Saudis unwilling to bend, there was little chance of a true deal to freeze production. The bottom line though is market forces and economics are starting to come into play. That means when you stop drilling the available supply starts to drop.

In a new research piece, Jefferies notes that while the near-term oil price euphoria over a potential Doha agreement certainly will take a shot near term, there are more than enough fundamentals pointing to higher prices in the second half of the year, not the least of which is geopolitical. With Nigeria, the United Arab Emirates, Saudi Arabia and Iraq production all dropping in March, and workers currently on strike in Kuwait, demand is increasing, and long term the Jefferies team thinks prices are going higher.

We highlight three top stocks rated Buy now at Jefferies, two of which are on the firms Franchise Picks stock list.

Chevron

This stock is very solid story for investors looking to stay long the energy sector, and it is a preferred U.S. company to own now. Chevron Corp. (NYSE: CVX) is an integrated oil and gas company with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals. It sports a sizable dividend and has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG). Some on Wall Street 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.

The company’s Permian Basin assets are a goldmine, and that the Australian LNG business will transition from a yearly $8 billion capital consumption drag to a $2 billion to $3 billion contributor. Combined with the much lower overall capital spending for the 2016 to 2018 period, the company is poised to not only hang around, but end the sector slump in a much better position. The analysts note the Permian acreage is profitable at $40 a barrel.

Jefferies points out in the report that it hosted a meeting with the company’s CEO, John Watson, who made it clear that preserving the dividend for investors is the top priority. The report also notes that although the company trades in line with its peers, the growth potential and solid balance sheet deserve a 10% premium.

Chevron investors receive a massive 4.4% dividend. The Jefferies price target for the stock is $110, and the Thomson/First Call consensus price target is $98.34. Shares closed trading on Monday at $98.70.

Encana

This top stock has been absolutely mauled, down a gigantic 84% since the summer of 2014. Encana Corp. (NYSE: ECA) engages in the development, exploration, production and marketing of natural gas, oil and NGLs in Canada and the United States. It owns interests in plays such as the Montney in northern British Columbia and northwest Alberta, Duvernay in west central Alberta, Clearwater in central and southern Alberta, Deep Panuke in offshore Nova Scotia, Cadomin/Doig in northeast British Columbia, Horn River in northeast British Columbia and Granite Wash/Doig in northwest Alberta.

The company reported better-than-expected fourth-quarter 2015 earnings on improved crude volumes. The bottom line was also better than first-quarter 2015. The stock is also a favorite at Goldman Sachs, especially if oil stays in the mid-$30s range.

Jefferies has a whopping $8 price target, while the consensus is lower at $7.20. The shares closed Monday at $6.68.

Gulfport Energy

This is one of the favorites around Wall Street among the smaller more nimble companies, and it is also a member of the Jefferies Franchise Picks portfolio. Gulfport Energy Corp. (NASDAQ: GPOR) is an independent oil and natural gas exploration and production company with its principal producing properties located in the Utica Shale of eastern Ohio and along the Louisiana Gulf Coast. In addition, Gulfport holds a sizable acreage position in the Alberta Oil Sands in Canada through its 24.9% interest in Grizzly Oil Sands.

Gulfport is a favorite of hedge fund managers. In fact, according to Insider Monkey, 36 hedge funds owned positions in the stock late last year. The shares hit some weakness on gas prices and a lower growth outlook, a move lower many believe is overdone and recent stock movement seems to have confirmed. With a multiple in line with peers and an expected ramp-up in production this year, the stock may be a great value at current levels.

The $35 Jefferies price target compares to the consensus target of $34.18. The stock closed Monday at $28.98.

While oil will continue to remain volatile, the trend clearly seems to be higher. While it could take decades to ever trade over $100 again, and that really is a pressure point on consumers, a continued move higher this year and next appears to be in the cards.

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