Investors looking for the upside that typically comes with aggressive, risk-oriented energy companies can find similar returns in the more defensive Chevron, according to Cowen and Co.
The oil major is Cowen analyst Sam Margolin's top pick for 2016, he told CNBC on Tuesday. The firm has a $122 target on shares of Chevron, a 34 percent premium to the current price at just above $91.
The average price target on the stock is $99.32, according to FactSet.
In addition to a healthy balance sheet with little debt relative to its spending plans, Chevron has a number of levers it can pull in the face of an oil rout that has slashed crude prices by roughly two-thirds in the last 18 months.
"We think it has a lot of upside as oil prices recover. They're pulling a lot of spending out of their profile, and at the same time they've got a lot of growth projects coming on this year that are going to contribute to volumes and growth," Margolin said in a "Squawk on the Street" interview.
Chevron announced earlier this month it would cut capital spending by 24 percent in 2016 to $26.6 billion. The company will not issue production forecasts until it reports earnings in January, but management previously said it expects output growth of 13 to 15 percent — about 2.9 million to 3 million barrels per day — by the end of 2017.