With a huge run by the various indexes off the December lows, and the first quarter drawing to a close, many investors are shifting some of their portfolios, looking for some value going forward. One good sector to peruse now is energy, with summer right around the corner, and with energy production actually being reduced by the U.S. Energy Information Administration for the first time in six months, there is some tremendous potential for the sector going forward.

In a new research report, RBC does a huge deep-dive into the metrics for the firm’s energy and production coverage universe, and given the firms solid reputation for energy coverage, we decided to screen the coverage list for the stocks with big upside to the RBC price targets.

We found four companies rated Outperform that have at least 60% upside to the RBC price targets. While not suitable for all accounts, they could be just the ticket for second-quarter outperformance.

Anadarko Petroleum

This top stock is still down a stunning 30% from highs printed in October, and it is on the RBC Best Ideas list. 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.

Anadarko has the capacity to sustain planned stock buybacks at current levels, providing support to close a value gap that many on Wall Street see at 50%. Strong free cash flow, enabled by advantaged Brent leverage, has competitive free cash compared with traditional large-cap “yield” names, but with competitive growth potential. The company has made a transition toward compelling value with growth and yield.

Anadarko Petroleum shareholders receive a 2.72% dividend. The RBC price target for the shares is $74, and the Wall Street consensus price objective is $68.17. Shares closed trading on Friday at $44.55.

Centennial Resource Development

This off-the-radar stock could have solid upside potential. Centennial Resource Development Inc. (NASDAQ: CDEV) is a pure play Permian oil and gas producer. It holds 87.9 thousand net acres across the Delaware Basin, with its largest position (76.1 thousand net acres) in Reeves and Pecos counties in Texas, and recently acquired position (11.9 thousand net acres) in Lea County, New Mexico. The company’s legacy position, which it was held since the time of its initial public offering in late 2016, covers 42.5 thousand net acres in Reeves, Pecos and Ward counties.

While the company’s 2019 production guidance was much lower than Wall Street expectations, some see the strategy as a solid move, and the firm still plans to complete 65 to 75 wells this year. In addition, its solid well results suggest good operational momentum.

RBC has a $15 price target, close to the $15.63 consensus target. The stock closed on Friday at $9.18.

Matador

This company has been mentioned recently as a potential takeover target, and it is another member of the Best Ideas list. Matador Resources Co. (NYSE: MTDR) is an independent energy company that engages in the exploration, development, production and acquisition of oil and natural gas resources in the United States.

The company primarily holds interests in the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. It also operates the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas.

Since its IPO, Matador has grown its Permian acreage by more than tenfold as a result of acquisitions, and it has 2,151 net horizontal locations across multiple prospective zones.

The $31 RBC price target is higher than the $26.35 consensus target. Shares closed Friday at $18.69.

Parsley Energy

This is another smaller capitalization stock for aggressive investors to consider. Parsley Energy Inc. (NYSE: PE) is an oil and gas producer with 227,000 net acres in the Permian Basin. The majority of acreage sits on the Midland side of the basin, but the company also holds a small acreage position in the Delaware Basin. Through strategic acquisitions and acreage swaps, it has grown its acreage position since its initial public offering and has over 7,900 horizontal locations across multiple prospective zones.

The company is a catalyst rich and is a Permian Basin pure play. Parsley Energy has some of the strongest wells in the basin, generating returns that are among the best in the industry. It is also rapidly de-risking its drilling inventory and is well-positioned to continue to beat its strong growth projections.

The RBC price target is $32. The consensus price target is $27.60, and shares closed most recently at $17.80.

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These four top stocks with huge 60% or more upside to the RBC targets also could be potential takeover targets. Even if none of them are bought, they are all very cheap and trading at valuations that make them great additions to aggressive portfolios of investors looking to add energy.

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