Stock picking

3 stocks to evaluate to take advantage of oil volatility, according to BofA

The energy sector promises to be turbulent in 2024 according to experts, with oil expected to maintain significant volatility.
Bank of America, aware of the geopolitical risks linked to events such as the crisis in Ukraine, tensions in the Middle East and the traffic blockage in the Suez Canal, nevertheless believes that 3 energy stocks could prove to be excellent investment choices.
The investment bank focuses in particular on defensive stocks, of large oil companies which concluded strategic billion-dollar acquisitions during 2023.
Let's look in detail at the growth prospects of these stocks and the reasons behind these choices.
read also Oil prices in free fall, 3% drop.
What happen? 1) Occidental Petroleum BofA's top pick is Occidental Petroleum, an oil and gas exploration and production company.
The investment bank says the billion-dollar deal with CrownRock will help restore the company's ability to shift value from debt to equity.
The target price for Occidental has been set at $80, with an expected upside of 35%.
However, forecasts suggest a negative earnings change in the current quarter, but a significant growth outlook for the next fiscal year.
2) Chevron BofA listed Chevron as one of its top picks, citing its acquisition of Hess for $53 billion as a strategic move to address issues related to cash flow and dividend capacity.
With a price target of $180, the bank expects 19% upside for the company's shares.
Analyst projections point to a significant increase in EPS for Chevron relative to the industry next year.
This thesis is supported by Goldman Sachs, according to which the interest rate cut proposed by the FED could lower the value of the dollar, allowing Chevron to increase margins.
With projections indicating a 17.4% increase in EPS over the next year, Chevron offers a 4% dividend yield, surpassing the yield of ten-year Treasury bonds.
The target price set by Goldman Sachs is $184.9, which implies a 24% rally for Chevron.
3) Exxon Mobil Bank of America's third pick is Exxon Mobil, with a price target of $140, suggesting an upside of 37%.
Despite a negative performance in 2023, the bank sees potential in the strategic acquisition of Pioneer Natural Resources, which accelerates cash flow growth, forecasting a doubling from pre-COVID levels by 2027.
The presence in the Stabroek block, offshore Guyana, and the acquisition of Pioneer Natural Resources could significantly strengthen Exxon Mobil's production prospects.
In an energy landscape marked by volatility and geopolitical uncertainties, these three choices from BofA offer investors opportunities for growth and defense.
However, it is essential to carefully monitor market developments, financial performance and geopolitical events that could influence the oil sector during 2024.
DISCLAIMER The information and considerations contained in this article should not be used as the sole or primary support based at which to make investment decisions.
The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon.
The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to public savings.

Author: A.W.M.

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