The media noted recently that if Texas was a country, it now would be the third top oil-producing nation in the world, and the Eagle Ford and Permian Basin regions are helping the top companies make this happen. With earnings for many of the biggest energy stocks hitting the tape this week, and energy once again looking like a solid bet for the rest of 2018 and beyond, many investors continue to add energy plays to their portfolios.

In a new research report, the energy team at RBC makes the case that many top energy companies learned their lessons well after the huge oil price downturn in 2014 and are maintaining capital discipline and focusing on shareholders returns.

Given that many investors feel the most comfortable with the liquid, large cap companies in the sector, we screened the RBC research universe for stocks rated Outperform, many of which are reporting earnings this week and next.

Anadarko Petroleum

This top company’s stock is still down a stunning 30% from highs printed in 2014, the last time oil traded at $70. Anadarko Petroleum Corp. (NYSE: APC) operates through three segments. The Oil and Gas Exploration and Production segment explores for and produces natural gas, oil, condensate and natural gas liquids. The other segments are Midstream and Marketing.

With oil prices at current levels, many on Wall Street believe Anadarko can reload share buybacks after the current program concludes.

Shareholders receive a 1.36% dividend. RBC recently raised the price target to $88 from $79, while the Wall Street consensus target is $81.76. The shares closed Monday at $73.71.

Concho Resources

This company recently bought RSP Permian for $9.5 billion, and most on Wall Street like the deal. 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.

It 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 RBC price target is $200, and the consensus target is $182.26. Shares closed Monday at $149.15. Concho is scheduled to report on August 1.

ConocoPhillips

This one may offer investors solid upside potential and could start growing its dividends again. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids worldwide.

Conoco’s portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects. Many Wall Street analysts feel the company can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford, and with visibility on future growth from a sizable position in the Permian.

The company posted a better-than-expected quarterly profit last week thanks to rising crude prices, prompting executives to boost capital spending and production targets for the year. ConocoPhillips said the additional spending would be on well completions, work with production partners and inflation.

Investors receive a 1.6% dividend. RBC has an $85 price target, and the consensus target is $80.05. Shares closed on Monday at $72.27.

Continental Resources

This company has very large exposure to crude oil. Continental Resources Inc. (NYSE: CLR) is primarily a producer of onshore U.S. oil and has positioned itself in two growing hydrocarbon discoveries in the country: 1) the Bakken oil play in Montana and North Dakota, and 2) the SCOOP/STACK in Oklahoma, giving the company good growth opportunities for years to come.

Many on Wall Street feel that the company’s investment thesis is virtually unmatched. Investors get core Permian-like acreage at a non-Permian valuation. Of greatest importance, Continental is one of few diversified large-cap stocks that offers investors exposure to low-cost oil outside of the Permian. With current capacity and distribution issues in the Permian, this is another solid reason to own shares.

Driven by significantly better 2016 and 2017 results when utilizing the high-intensity completions, and having an unhedged 2018 and 2019 oil production profile, the company is estimated to generate a 5.4% and 5.6% free cash flow yield at the strip. Toss in an expansive low-cost oily resource inventory, which could provide decades of drilling locations with a reasonable valuation, and the shares are compelling.

The $72 RBC price target compares with the consensus target of $74. Shares closed Monday at $63.43. Look for the earnings report on August 7.

EQT

This company is expected to have a stunning percentage of its production come in as natural gas. EQT Corp.’s (NYSE: EQT) superior cost structure and above-average growth may help it exploit stable and rising natural gas prices. With an increasing reserve structure and a projected higher number of Marcellus wells to be drilled in the coming five years, the company exhibits industry-leading organic growth momentum.

With more than 125 years of experience, EQT continues to be a leader in the use of advanced horizontal drilling technology. This technology is designed to minimize the potential impact of drilling-related activities and reduce the overall environmental footprint.

Second quarter 2018 adjusted earnings per share beat the consensus estimate and also improved from the prior-year level. Surging profit from the EQM Gathering segment primarily contributed to the strong second-quarter earnings that were somewhat negated partially by lower natural gas equivalent prices.

The stock was hammered on the results despite total operating revenues jumping 53.1% year over year as the top line numbers missed estimates. This is offering investors a very good entry point on the shares.

Investors receive a 0.24% dividend. RBC has set its price target at $74. The consensus target is $69.06, and shares closed at $49.69 on Monday.

Pioneer Natural Resources

Many Wall Street analysts love this stock for a pure crude oil play. Pioneer Natural Resources Co. (NYSE: PXD) operates a modern fleet of more than 24 top performing drilling rigs throughout onshore oil and gas producing regions of the United States and Colombia. Pioneer production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.

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. With a stellar balance sheet, the company is poised to remain a top player in the Permian as it expects to deliver solid production growth in 2018 and beyond.

The company’s unmatched depth of low-cost inventory and balance sheet allow it to compete favorably in both mild and moderate recovery case scenarios. In addition to asset and financial strength, many analysts feel that Pioneer offers the second highest multiple contraction among the large-cap Permian pure-play peers, as well as the highest free-cash-flow yield.

Investors receive a 0.05% dividend. The RBC price target is $226. The consensus target is $243.72, and pioneer closed on Monday at $191.27. Its report is expected August 7.

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These top energy companies are all large cap leaders that give investors the liquidity and strength many are looking for. Those wanting to play it safe may want to go with the companies that have already reported for the second quarter.

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