After being the crown jewel of fracking for the better part of the last five years, success has finally caught up with the Permian Basin in West Texas and New Mexico. The ability to transport production is being hampered by pipeline capacity issues and, as a result, some of the top stocks in the Permian Basin have been hit hard. Investors are being offered some of the best entry points in a year.

A new research report from Jefferies, which has been an outspoken bull on energy for some time, makes the case that while capacity restraints for both oil and gas are an issue, the selling in some of the top companies is way overdone, especially considering the positive overall energy environment.

According to the report:

The Permian has fallen on tough times despite the strong oil macro environment, a victim of its own success as volume growth is expected to outstrip pipeline capacity for both oil and gas and oil basis differentials have blown out to levels last seen in 2014. While investors have flocked to operators with exposure outside of the Permian, and we have flagged strong returns in the Bakken, Eagle Ford and DJ, we argue the sell-off in Permian shares offers investors a rarified buying opportunity in some of the best assets.

Three companies are specifically mentioned by the analysts and all are rated Buy at Jefferies. In addition, the firm is raising its price targets for oil going forward.

Diamondback Energy

This stock is a top Permian Basin play for more aggressive accounts and is a Franchise List pick at Jefferies. 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 in West Texas.

Diamondback’s activities are primarily focused on the horizontal exploitation of multiple intervals within the Wolfcamp, Spraberry, Clearfork and Cline formations.

Wall Street analysts have noted in the past the company’s top-tier asset base, solid accretive additions and financial discipline which they think allows for not only continued solid cash flow, but could put the company in play as a takeover target. Diamondback continues to drill some of the most economical wells in the U.S. as efficiencies improve, costs decrease, and activity remains in the better regions.

The Jefferies price target on the stock is raised to $170 from $162. The Wall Street consensus is set at $159.38. The shares are down slightly Monday at $113.48.

Concho Resources

This company has been growing through acquisitions and is another top Permian play for investors to look at. Concho Resources, Inc. (NYSE: CXO) is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties.

Concho Resources offers investors a unique combination of investment themes, including valuation, rate-of-change, and resource expansion themes. The company is the largest acreage holder of the publicly traded Permian large-caps and provides investors peer-leading exposure to three of the most impactful catalysts across the Delaware Basin including the Wolfcamp XY, Wolfcamp D and Bone Spring Shale.

The Jefferies price target is boosted from $190 to $204. The Wall Street consensus is posted at $185.29. The shares are trading at $12881 early Monday.

Callon Petroleum

This is one of the small cap stocks that the Jefferies team feels comfortable about currently. Callon Petroleum Company (NYSE: CPE) is an independent oil and natural gas company. The Company is engaged in the exploration, development, acquisition and production of oil and natural gas properties. The Company focuses on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin.

The Company’s drilling activity focuses on the horizontal development of various prospective intervals in the Midland Basin, including multiple levels of the Wolfcamp formation and the Lower Spraberry shale. It owns additional immaterial properties in Louisiana. As of December 31, 2016, the Company had owned leaseholds in 39,570 net acres in the Permian Basin, all of which was located in the Midland Basin.

The analysts said this in a recent report on the company:

Callon Petroleum is delivering some of the best well performance across the Midland Basin and has been much closer to the leading edge of completion intensity relative to peers, which could lead to further separation from the pack. The company has been spotty on meeting Wall Street expectations over the past couple years, but that should prove a thing of the past, as infrastructure investments should drive a more predictable manufacturing story in Howard County, and eventually in the Delaware Basin.

The Jefferies price target is $18, and the Wall Street consensus is $17.10. The shares are trading at $10.14 early on Monday.

These three top companies in the oil- and gas-rich Permian Basin are being offered to investors at a staggering discount. While the pipeline issues won’t be resolved overnight, the shoot first and ask questions later treatment of these companies makes them outstanding buys now.

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