While most of Wall Street focuses on large-cap and mega-cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Many of the biggest public companies, especially the technology giants, trade in the hundreds, all the way up to over $1,000 per share or more. At those steep prices, it is difficult to get any decent share count leverage.
Many investors, especially more aggressive traders, look at lower-priced stocks as a way to not only make some good money but to get a higher share count. That can really help the decision-making process, especially when you are on to a winner, as you can always sell half and keep half.
Each week we screen our 24/7 Wall St. research database looking for stocks rated Buy at major firms and priced under the $10 level, and this week we screened specifically for energy stocks. With West Texas Intermediate (WTI) crude trading near the $60 a barrel level, and expected to go even higher this summer, these could all have big-time upside potential. Plus, we found two master limited partnerships (MLPs) that both pay big distributions.
With the number of new equity traders skyrocketing over the past year due to the Robinhood and WallStreetBets popularity, locating good ideas to trade has become even more challenging. These five could all prove to be exciting additions for traders looking for solid alpha potential. While they are definitely better suited for aggressive investors, it is still important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Cenovus Energy
Given the recent price of WTI, shares of this company in the Great White North may be a solid energy idea. Cenovus Energy Inc. (NYSE: CVE) develops, produces and markets crude oil, natural gas liquids (NGLs) and natural gas in Canada, the United States and the Asia Pacific region.
The Oil Sands segment develops and produces bitumen in northeast Alberta. Its bitumen assets include Foster Creek, Christina Lake and Narrows Lake, as well as other projects in the early stages of development. The Conventional segment holds assets primarily located in Elmworth-Wapiti, Kaybob-Edson and Clearwater operating areas of British Columbia and Alberta, as well as various interests in natural gas processing facilities.
The Refining and Marketing segment transports and sells crude oil, natural gas and NGLs. This segment owns a 50% ownership in Wood River and Borger refineries located in the United States, and it owns and operates a crude-by-rail terminal in Alberta.
CIBC has a massive $16 price target on the shares, while the Wall Street consensus target is just $10.85. Cenovus Energy stock has had a solid run and recently has been trading north of $7.50 a share.
Crescent Point Energy
This is another Canadian company that makes sense for investors looking to get some share-count leverage. Crescent Point Energy Corp. (NYSE: CPG) explores, develops and produces light and medium crude oil and natural gas reserves in western Canada and the United States. The company’s crude oil and natural gas properties, and related assets are located in the provinces of Saskatchewan, Alberta, British Columbia and Manitoba, as well as the states of North Dakota and Montana.
The company recently closed its accretive transaction previously announced in February, when it acquired Shell Canada Energy’s Kaybob Duvernay assets in Alberta for $900 million This strategic acquisition enhances Crescent Point’s core principles of balance sheet strength and sustainability. In particular, these assets, which are situated in the heart of the condensate rich fairway, are expected to enhance the company’s free cash flow profile and inventory depth and include key infrastructure that is expected to lower future capital requirements.
The TD Securities price target is $8, which compares with an $8.85 consensus target. The stock was near $4 a share late last week.
Energy Transfer
This top MLP is a very safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.
This publicly traded limited partnership has core operations that include complimentary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, NGLs and refined product transportation and terminaling assets; NGL fractionation; and various acquisition and marketing assets.
Through its ownership of Energy Transfer Operating, formerly known as Energy Transfer Partners, the company also owns Lake Charles LNG, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco, and the general partner interests and 39.7 million common units of USA Compression Partners.
Investors finally received the long-anticipated distribution cut last fall, which was a stunning 50%. However, at $0.61 per unit, investors are still paid a stellar 7.44%.
The sizable $11 BofA Securities price target is not too far off the $10.84 consensus target. Energy Transfer stock rose above the $8 level on Friday.
Plains All American Pipeline
This is another top MLP pick across Wall Street. Plains All American Pipeline L.P. (NYSE: PAA) is primarily engaged in midstream crude oil activities, including transportation, gathering, marketing and terminaling.
Top analysts feel the company deserves a premium valuation given its leverage to the Permian and attractive organic growth backlog. The company owns an extensive network of pipeline transportation, terminaling, storage and gathering assets in key crude oil and NGLs producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, Plains All American handles more than 6 million barrels per day of crude oil and NGLs in its Transportation segment.
Investors in Plains All American Pipeline stock receive a 7.89% distribution. BofA Securities has set a $13 price objective. The posted consensus target price is $11.63, and shares have traded mostly above $9 in the past month.
Southwestern Energy
This stock has traded sideways all year long and could be ready to run. Southwestern Energy Co. (NYSE: SWN) is one of the largest U.S. natural gas producers. Its primary producing locations are in the Fayetteville region and the Marcellus Shale. The company has acquired acreage in southwest Appalachia, is exceeding expectations and provides a runway to growth.
The company’s estimated proved natural gas, oil and NGLs reserves comprise 12,721 billion cubic feet of natural gas equivalent (Bcfe) and 929 Bcfe of proved undeveloped reserves. It also engages in marketing of natural gas, oil and NGLs. Southwestern Energy serves energy companies, utilities and industrial purchasers of natural gas.
Johnson Rice recently started coverage with a $6.75 price target. The $4.85 consensus target is much closer to the $4 or so where Southwestern Energy stock traded recently.
With WTI pushing the $60 level, many on Wall Street are pounding the table on the sector as a go-to trade and place to be for 2021. These five stocks offer aggressive investors a way to play the sector plus get some solid share count leverage.
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