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5 Oil Stocks Set to Make a Comeback
Some could see an upside of up to 31%
August 19, 2010 | By InvestorPlace Staff

Oil Stocks With Big-Time Upside

It was the summer of American discontent with the oil industry in the wake of the BP plc (NYSE: BP) Gulf spill. But now that the well is capped — and President Obama himself has taken a dip in the Gulf waters — investors are hoping that as the summer cools off, oil stock prices start to heat up.

Of course, it’s still tough going for some oil stocks. Economic growth questions overseas coupled with worries over domestic crude oil demand have investors on alert. On the Nymex, the September delivery contract for crude has headed south to $75.20 a barrel in a season that usually sees surging oil prices. Other analysts also say technical factors point to a further pulldown in prices.

But not all oil stocks are suffering. A closer look at some major energy industry picks shows that the popular opinion favors an upside of up to +31% in some of the biggest names in crude.

Here are five oil stocks to watch.

#1 – BP Plc (BP)

Median Target: $45.00
Current Price: $36.24
Projected Upside: 24%
Data as of market close 8/19

Though much maligned after the recent oil spill, BP plc (NYSE: BP) has bottomed out according to most estimates. Of the seven analysts placing targets on BP stock, the lowest projected price is $40 per share according to Thomson/First Call. Of course, with open liability ahead, the oil company could see some downward revisions to price targets, and shares could slide some more after giving up -37% year-to-date. But with over a century of oil and gas exploration under its belt and operations around the world, there is also a very good chance BP could be on the way up. BP stock has already bounced back over +20% since July.


#2 – Chevron (CVX)

Median Price Target: $92.50
Current Price: $75.84
Projected Upside: 22%
Data as of market close 8/19

On Monday, Chevron (NYSE: CVX) announced a “significant” offshore natural gas discovery in Western Australia, which gave the stock a much-needed boost and truly couldn’t have come at a better time. The company boasts a diverse internal portfolio, engaging in every aspect of the oil, gas and geothermal energy industries: exploration and production, refining, marketing and transport, chemicals manufacturing, power generation and more — but its natural gas exploration may offer summer salvation. The last three years have seen profits fall steadily. And although it had a summer slump as well, its +10% increase since July could herald better times ahead for the stock if conditions improve.


#3 – Conoco Phillips (COP)

Median Price Target: $64.00
Current Price: $54.71
Projected Upside: 17%
Data as of market close 8/19

An international energy corporation that’s expanding heavily into refining and natural gas, Conoco Phillips (NYSE: COP) is something of a curiosity of late. Share prices have suffered recently in August, but at +7.0% year-to-date against the Dow and S&P 500, it remains well above its competition in 2010. Shares of ConocoPhillips mostly have been in pullback mode for the month so far, and that provides investors a great opportunity to buy in at a bargain, if the consensus target of $64 for COP stock holds accurate.


#4 – Exxon Mobil Corp (XOM)

Median Price Target: $77.50
Current Price: $59.29
Projected Upside: 31%
Data as of market close 8/19

With the Gulf spill touching off memories of its own Alaskan misadventures, Exxon suffered a rough summer even without spilling anything. Exxon Mobil Corp (NYSE: XOM) saw its stock drop heavily since May, and it hasn’t quite been able to rebound to date. Its lowest analyst target, according to Thomson/First Call, rests at $48, well under its current price. As one of the largest publically traded companies in the world, Exxon shouldn’t stay down for long, even at -13% year-to-date against the Dow and S&P 500. Its daily oil production tops every other oil company, and the world needs oil. Most analysts agree it’s a stock to hold on to, with a hefty 31% upside projected for XOM stock.


#5 – Total (TOT)

Median Price Target: $63.00
Current Price: $48.81
Projected Upside: 29%
Data as of market close 8/19

A French oil company with businesses covering the entire oil and gas chain — from crude oil and natural gas exploration and production to power generation, transportation, refining, petroleum product marketing and international crude oil and product trading — Total (NYSE: TOT) is one stock that’s offering purchase potential at the bottom. Down -23% against the Dow and S&P 500, it’s been having trouble moving out of its current drop year-to-date in the wake of euro zone trouble. Several analysts, such as Citigroup, are encouraging a “Buy,” and of seven Thomson/First Call analysts that noted its price target, even the lowest is at $56.50, which is well ahead of the price of this France-based oil stock.

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