3 oil stocks just waiting for rate cuts

Oil has received little to no attention in the last 12-24 months. Most of the market’s attention has gone to technology stocks, with names like NVIDIA NASDAQ:NVDA surpassing its all-time high multiple times thanks to explosive financial data and the hype surrounding AI as it is adopted by more and more industries today.

After falling as much as 37% from its 2022 high of around $120 a barrel, oil is now in a tight range of $70 to $80 a barrel. He has difficulty getting out and finding a clear direction. However, this could change quickly due to a bullish commodity cycle. The reasons for the possible breakout are known, and Wall Street analysts are already outlining their expectations for where oil could go.

Before you get into the weeds of the upcoming swing, focus your attention on names like Hess NYSE: YES, Western oil NYSE: OSSIand even Marathon oil NYSE:MRO as the stocks that are likely to come out on top in the next phase of the cycle. That’s why the energy stocks sector will heat up soon.

Gears in a car

The Federal Reserve (Fed) is looking to cut interest rates by the end of the year, which, according to the FedWatch tool of the CME Group Inc. NASDAQ: ECM, it could arrive as early as May this year. With this in mind, Wall Street analysts are starting to feel much more comfortable presenting their projections.

The forecast is between 70 and 100 dollars a barrel The Goldman Sachs Group Inc. NYSE:GS. You can find the company’s in-depth research here. Considering the market is currently trading at the bottom of that range, investors could quickly become bullish on some stocks in the sector.

Furthermore, in another report, Goldman analysts lay out their views on the US manufacturing sector, which is an oil-adjacent industry. Due to potential interest rate cuts, manufacturing activity in the economy could suddenly increase.

Unless they are still operating with the technology of the industrial revolution, factories today depend on oil to fuel their operations. Additionally, most US exports depend on oil for their production. Therefore, a surge in manufacturing activity translates directly into a surge in oil demand.

It’s no wonder how some traders have pushed oil futures into a state known as contango. According to the CME Group, oil futures now show a curve that reflects the expected price rise in the coming months. Who these traders are is speculation, but what matters is that they are already scanning the space.

Knowing what you know now and how current developments can quickly change the situation for the better for oil stocks, it’s time to make the best potential selection for your portfolio. These are the best stocks to take advantage of rising oil prices.

Golden Selection

Following analysts’ earnings per share projections and selected price targets can bring you closer to stocks that are preparing to take off. Speaking the language of the market is crucial in your analysis, and this is where the message begins.

All three of these stocks have seen favorable price action over the past twelve months, which cannot be said about the rest of the sector, as deduced from the analysis SPDR Fund Energy Select Sector NYSEARCA: XLE as it underperformed the broader S&P 500 index by as much as 27% during this period.

Trading at 91% of its 52-week high price, Occidental Petroleum (one of Warren Buffett’s stocks) leads the pack in price action, and analysts give it further support from here. With expected 29% EPS growth, analysts are pushing for a stock price target of $70, showing upside of 14% from today.

In second place is Hess, trading at 88% of its 52-week high and receiving the same love from Wall Street. Analysts expect to see 28% growth in EPS for the next twelve months, and price targets of $174 per share give it a net upside of 18% from where it trades today.

Finally, Marathon Oil is trading at 83% of its 52-week high, making it the third name of these industry-leading stocks. With a price target set at $31 per share, this stock is set to rally 27% if analysts are correct in their assessment.

These targets could be driven by an equally attractive 18% increase in EPS forecast for the next twelve months. So while oil could rise in the single digits in the coming months, these stocks could potentially give you a much better bang for your buck.

Before you consider Goldman Sachs Group, you’ll want to hear this.

MarketBeat tracks daily Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and The Goldman Sachs Group wasn’t on the list.

While Goldman Sachs Group currently has a “Moderate Buy” rating among analysts, top analysts believe these five stocks are better buys.

View the five stocks here