High oil prices and lower capital expenses should lead oil stocks to throw off cash, and investors should add a few winners from this sector, according to Morgan Stanley.
While energy prices dipped on Thursday amid broad commodity weakness, the benchmark oil prices in the U.S. and Europe are still up about 80% over the past year. The industry has seen demand surge and reserves dwindle as economies reopen.
Analyst Devin McDermott shuffled his ratings for energy stocks on Friday, upgrading Occidental Petroleum to overweight from equal weight and Marathon Oil to equal weight from underweight. McDermott said in a note to clients that these shifts were to gain more exposure to high oil prices in particular.