This post was originally published on this site
Looking at his stock calls, in the integrated space they prefer Cenovus Energy (NYSE:CVE), Suncor Energy (NYSE:SU), and Chevron (NYSE:CVX). “All 3 are positioned to benefit from higher crude prices and have no European refining capacity,” Gupta commented.
Within refining coverage Valero Energy (NYSE:VLO). Phillips 66 (NYSE:PSX), Marathon Petroleum (NYSE:MPC), and HF Sinclair Corp (NYSE:DINO) remain their top picks to play the theme of global shortages in products. “PSX’s chemical and midstream business will also benefit from higher crude oil prices,” Gupta added.
Midstream companies with the most direct exposure to crude prices include Targa Resources (NYSE:TRGP) and DCP Midstream LP (NYSE:DCP), the analyst said.
The analyst noted that Plains All American Pipeline LP (NASDAQ:PAA) also presents some crude beta. “While having little direct commodity price exposure, PAA captures nearly half the crude market share in the Permian and benefits from each incremental barrel of production,” the analyst said.
In E&P, they favor Ovintiv Inc. (NYSE:OVV) given the meaningful inflection in cash returns in 2H22.
Among the large-cap names, they also like ConocoPhillips (NYSE:COP), which is the least expensive large-cap E&P and offers a differentiated cash payout formula, and Diamondback Energy (NASDAQ:FANG), which has an above-average cash return yield and is a YTD laggard.
