9 Stocks to Buy When Oil Prices Are Low
https://money.usnews.com/investing/stock-market-news/slideshows/9-oil-stocks-to-buy-when-oil-prices-are-lowSlowing global economic growth and demand concerns have WTI crude oil prices down more than 20% from a year ago. Oil investors were hoping for much higher prices in 2019 than the mid $50s per barrel, and the energy sector has once again lagged the market significantly this year.
Bank of America analyst Doug Leggate recently lowered his oil price forecast for the second half of 2019 from $68 per barrel to $63, but Leggate says there are still plenty of value opportunities among oil stocks today.
Here are nine oil stocks Leggate recommends.
1. Exxon Mobil Corp. (ticker: XOM). Leggate says Exxon has the strongest project pipeline of any oil major, including developments in Guyana and the U.S. Permian Basin. Exxon management has a five-year plan in place to double free cash flow by 2025. Leggate says investors can enjoy the stock’s 4.5% dividend while they wait for that cash flow to come rolling in.
Exxon is his top stock pick among oil majors, and he expects Permian production to reach 1 million barrels of oil equivalent per day by 2024. Bank of America has a “buy” rating and $100 price target for XOM stock.
2. Noble Energy (NBL). While many oil investors await better market conditions and/or a positive shift in investor sentiment, Noble has a major company-specific catalyst coming at the end of 2019. The company’s Leviathan project is expected to be up and running full throttle in 2020
Leggate says Noble’s Israel property differentiates the stock from its peer group and will create a more than $1 billion inflection in free cash flow by the end of the year. Noble recently raised its dividend by 9% as well. Bank of America has a “buy” rating and $41 price target for NBL stock. – Wayne Duggan
