Goldman reveals the 'sweet spot' for its favorite oil stocks — and gives one 35% upside

Published Sun, Sep 11 20228:26 PM EDT

As fears over the global energy supply came back into focus last week, Goldman highlighted six oil and gas themes which it said looked attractive into the year end. The investment bank says "the sweet spot" for energy stocks is around $90 per barrel for Brent, in the long term. Brent crude futures are currently hovering around the $90 mark, trading at $90.71 a barrel on Friday. "If we can average that over the better part of the next 5-10 years, Energy stocks can claw back some of a decade of lost performance," Goldman analysts wrote in a Sept. 6 report. Energy stocks have been on a tear this year, despite broader market volatility. Energy is one of only two subsectors — the other being utilities – in the S & P 500 to be in the black so far in 2022, according to FactSet. Read more Positioning for a ‘bullish shock’ to oil markets? Here’s one strategist’s top stocks to cash in Uranium is 'on a tear' right now. Here are two ETFs to play it This chip stock has convincingly beaten its peers this year – and analysts think it can go higher Goldman says it sees total returns of 15% for large-cap stocks under its oil and gas coverage. In particular, it singled out a number of oil stocks which it said had attractive total returns looking ahead. These included oilfield services firm Schlumberger , with a price target of $46, giving it potential upside of 20%, and Diamondback Energy , with a price target of $155, or 17% potential upside. Six oil and gas themes — and stocks Goldman also listed six oil and gas themes it says are attractive, with related large-cap buy-rated stocks under each. 1. U.S. and global gas: It says natural gas will be a "core part" of the energy eco-system for the next decade. Stock pick: EQT Corporation (price target of $53, or upside of 12%) 2. Strong free cash flow generation should enable capital returns to continue, Goldman says. Stock pick: Cenovus Energy (price target of $24, or 35% upside) 3. Global diesel: Goldman predicts tight diesel markets in the next six months. Stock pick: ExxonMobil (price target of $112, or 18% upside) 4. Companies with "important energy transition stories." Stock pick: Quanta Services (price target of $150, or 2% upside) 5. Energy security: Goldman says it sees an "important inflection" in energy spending on a multi-year basis to meet long-term demand. Stock pick: Halliburton Company (price target of $37, or 30% upside) 6. Upstream growth projects that are "underappreciated," says Goldman. Stock pick: Hess Corporation (price target of $139, or 18% upside)