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Credit Suisse's Top 8 Energy Stocks: Schlumberger Out, Franks In

Credit Suisse's Top 8 Energy Stocks: Schlumberger Out, Franks In
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The Energy sector has been the worst-performing market sector in 2015, and the Energy Select Sector SPDR ETF (NYSE: XLE) has fallen 14.9 percent versus the S&P 500’s 3.8 percent decline year-to-date. For the first time in two months, Credit Suisse analysts have updated their top Energy stock picks in 10 different subsectors.

Here’s a full list of the names they chose.

1. Alternative Energy: SolarCity Corp (NASDAQ: SCTY)

Analyst Patrick Jobin sees the company as a “key beneficiary” in the trends toward residential solar and lower capital costs via use of financial vehicles.

2. Independent Refining: Marathon Petroleum Corp (NYSE: MPC)

Analyst Ed Westlake believes that the synergy of the company’s recently-acquired Hess Corp. (NYSE: HES) retail business are “exceeding plans” and is confident that the company will continue to benefit from self-help initiatives.

Related Link: Credit Suisse's Top 10 Consumer Discretionary Stocks: J M Smucker In, Mondelez Out

3. Integrated Oil & Gas: Marathon Oil Corporation (NYSE: MRO)

Westlake believes that Marathon’s upstream cash margins “have room to rise as shale production rises and the oil price recovers.”

4. MLPs: Genesis Energy, L.P. (NYSE: GEL)

Analyst John Edwards believes that the MLP is defensive in terms of its direct exposure to commodity price weakness and offensive in terms of the distribution growth expected following its recent acquisition of offshore assets from Enterprise Product Partners LP (NYSE: EPD).

5. Oil & Gas Exploration & Production: Devon Energy Corp (NYSE: DVN)

Analysts Ed Westlake and Mark Lear caution that Devon faces near-term oil price risk but should ultimately outperform “given its defensive valuation, top quartile oil growth profile, and further accretion potential from EnLink.”

6. Oil Services & Equipment: Franks International NV (NYSE: FI)

Analyst James Wicklund praises the company’s “self-help improvements with a good underlying business.” Franks replaces Schlumberger Limited. (NYSE: SLB) as the only new Energy stock on Credit Suisse’s updated list.

7. Oilfield Services & Marine Transport: Euronav NV (NYSE: EURN)

Analyst Greg Lewis believes the company has “ample flexibility for fleet acquisitions” and is free to return 80 percent of net income to shareholders via dividends.

8. SMID Cap Oil & Gas Exploration & Production: PDC Energy Inc (NYSE: PDCE)

Lear is impressed by the company’s projection of about 35 percent production growth in 2016 compared to only 2 percent average growth for peers.

Disclosure: the author owns shares of Schlumberger.

Posted-In: Credit Suisse Ed Westlake John Edwards Patrick JobinAnalyst Color Long Ideas Analyst Ratings Trading Ideas Best of Benzinga


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