Two Wall Street’s favourite oil stocks for 2022
- Wall Street is increasingly turning positive on oil stocks.
- Goldman Sachs and Morgan Stanley boosted their Brent oil projections.
- ConocoPhillips & Devon are top oil stocks worth keeping a close eye on.
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Wall Street is progressively turning positive on oil stocks after years of negativity, with a growing number of experts expressing hope that the worst may be behind us. For instance, after Goldman Sachs’ upgraded their forecast for Brent oil price to $105 earlier this week, Morgan Stanley oil strategist Martijn Rats also boosted his Brent oil price projection to $100 for Q3 2022.
So what oil and gas stocks should investors keep a close eye on? Here are our two picks based on their technical analyses and their price movements.
ConocoPhillips (NYSE:COP) is a leading shale company focused on conventional and tight oil reservoirs, shale gas, heavy oil, LNG, oil sands, and other production activities.
Bank of America upgraded COP shares from Neutral to Buy with a $67 price target last year, describing the company as a “cash generator” with the potential for faster profits. Currently, the stock has exceeded those price targets and is now trading at $88.87. This shows that Conoco can accelerate cash returns at an early and more significant pace than any other ‘pure-play’ E&P or oil major.
COP shares have returned 14.6% so far this year and are up 91.5% over 52 weeks. Conoco is set to return around $7 billion in cash to investors over the coming year.
Due to high profitability and ongoing cost discipline, including a variable dividend structure, Devon Energy Corporation (NYSE:DVN) has been one of the best-performing energy stocks.
Devon paid a regular dividend of $0.11 per share and a variable dividend of $0.24 per share for the quarter, resulting in an annualised yield of 5.5 percent.
Furthermore, if current trends continue, the firm expects a dividend yield of more than 7% in 2022, demonstrating its commitment to returning additional capital to shareholders in the form of dividends whenever cash flows allow.
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