All the companies that we follow here at 24/7 Wall St. keep a list for their institutional and retail clients of high-conviction stock picks. These are generally the companies they not only like on a longer term basis, but those that usually have big upside to the assigned target price. Since the beginning of the year, many firms on Wall Street have tweaked their lists to account for potential changes in 2018, and one company has added some outstanding stocks we feel could have outsized upside.

In a recent research note, the analysts at Jefferies made a big move by adding a top health care company to the firm’s well-respected Franchise Picks list of stocks to Buy. Molina Healthcare Inc. (NYSE: MOH) was raised to Buy and becomes the newest member of the Franchise Picks list.

The company is one of the largest Medicaid managed care plans in the United States, administering programs in over a dozen states. The company operates through three segments: Health Plans, Molina Medicaid Solutions and Other. The Health Plans segment operates plans in 12 states. As of December 31, 2017, this segment served approximately 4.5 million members who were eligible for Medicaid, Medicare and other government-sponsored health care programs.

The Jefferies analyst is very positive on the company and noted this when the stock was added to the Franchise Picks portfolio:

Analyst Dave Windley thinks the stabilization, turnaround, and path to earnings per share growth is more visible now with new CEO Zubretsky (joined Nov ’17) laying out a very detailed game plan at the company’s late May Investor Day. Dave believes the turnaround plan is responsibly conservative and significantly value-enhancing (EPS power is ~$10 in 4-5 yrs versus his $4.56 2018 estimated figure). The biggest risk to Molina is the TX re-procurement, the state has 2 request for proposals that will be awarded close to each other in Oct 2018 and Jan 2019. 12-14% of profits come from the state, but Dave estimates that the reasonable downside is 5-6% of profits, based on Molina’s current positions, competition, and the Texas award intentions.

The Jefferies price target for the shares is $124, and the Wall Street consensus target is at $97. The stock at $102.31 just after Monday’s opening bell.

In addition, the following top energy stock are also on the Franchise Picks List, and with oil shooting higher Friday, all make good sense for investors to look at now.

Chevron

This integrated giant is a safer way for investors looking to stay or get long the energy sector, and it has big Permian Basin exposure. Chevron Corporation (NYSE: CVX) is a US-based integrated oil and gas company, with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals.

The company sports a sizable dividend and has a solid place in the sector when it comes to natural gas and liquefied natural gas. Some on Wall Street estimate that the company will have a compound annual growth rate of over 5% for the next five years.

The company’s production from the Permian Basin continues to exceed trajectory, and it provided investors with a reasonably bullish update at the March 6 investors day.

With Permian production and asset disposals targets reset, the company can raise the dividend 20% and buyback 15% of shares. Many analysts view the strategy update as appropriately conservative for one of the more oil-levered majors. The Chevron strategy through 2020 is focused on discipline, enabled by step change in capital efficiency driven by doubling Permian production.

Chevron shareholders are paid an outstanding 3.58% dividend. Jefferies has a price target of $157, and the posted consensus price target was last seen at $145.68. The shares traded early Monday at $124.30 apiece.

Diamondback Energy

This is a top Permian Basin play for more aggressive accounts and is a top pick across Wall Street. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company headquartered in Midland, Texas, and 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 United States as efficiencies improve, costs decrease and activity remains in the better regions.

The $170 Jefferies price target is well above the consensus target of $159.84. The stock traded at $126.25 first thing Monday.

Marathon Petroleum

With a big deal in place, this company is poised to be the biggest refinery in the United States. Marathon Petroleum Corp. (NYSE: MPC) is one of the newest members of the Jefferies Franchise List, and it is at the beginning of the long process of completing a massive purchase of another refining giant. The company agreed to buy rival Andeavor for $23.3 billion in the biggest-ever deal for an oil refiner.

The offer, payable in either cash or shares, values Andeavor at about $152.27 a share. That represents a 24% premium over the closing price the prior to the announcement. Following the deal, Marathon will be the largest operator of refining capacity in the United States, and most on Wall Street believe that management can achieve the $1 billion in synergies it has suggested.

Shareholders are paid a 2.53% dividend. Jefferies has set its price target at $95. The consensus target is $86.56, and the shares were last seen trading at $71.37 apiece.

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It is important to remember that many energy stocks are still playing catchup to the actual price of oil. While the price of oil could very well fluctuate some, it’s a good bet it stays over the $65 level since the OPEC deal was reached, and that is a money-maker for most of the companies in the industry.

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