In this article, we will look at the Goldman Sachs Energy Stocks: 10 Stocks to Buy.
US stocks have bounced back significantly from the April rout amid soaring fears of missing out on the rally among investors. Likewise, Goldman Sachs is warning there are valid reasons to approach recent gains with caution. This is especially true in lower-quality parts of the market, where short sellers are under pressure to cover their positions.
“We flagged two weeks ago that the short squeeze the market was facing could provide an opportunity to press shorts lower, and we think that time is getting closer,” said Louis Miller, a managing director at Goldman
The remarks come as Goldman Sachs Asset Management (GSAM) co-head of quantitative investment strategies, Osman Ali, insists on caution in the energy industry.
“Despite the oil shock we are observing now, and the outperformance of energy equities, I think you should be cautious of the sector in general due to the broader weakness in that complex,” Ali said.
Goldman Sachs has already forecasted a geopolitical risk premium of $12 per barrel should geopolitical uncertainty in the Middle East result in supply disruptions.
“While we still assume no significant disruptions to oil and natural gas supply, the downside risks to energy supply and the upside risk to our energy price forecasts have raised,” the team led by Daan Struyven said in a note.
With that in mind, let’s look at Goldman Sachs Energy Stocks: 10 Stocks to Buy
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Our Methodology
To compile the list of the Goldman Sachs Energy Stocks: 10 Stocks to Buy, we scanned the US equity markets focusing on energy stocks that Goldman Sachs holds significant stakes in. We also focused on energy stocks that are popular among elite hedge funds. Finally, we ranked the stocks in ascending order based on Goldman Sachs’ equity stakes in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Goldman Sachs Energy Stocks: Stocks to Buy
10. Antero Midstream Corporation (NYSE:AM)
Goldman Sachs Equity Stakes: $69.74 Million
Number of Hedge Fund Holders: 36
Antero Midstream Corporation (NYSE:AM) is one of Goldman Sachs’ top energy stock picks. On June 3, Morgan Stanley analyst Devin McDermott reiterated an ‘Underweight’ rating on the stock. However, the analyst raised his price target of the stock to $17 from $16.
The price target hike underscores a positive adjustment in the valuation outlook despite the Underweight rating. The increase also underscores Morgan Stanley’s expectations and projections based on the prevailing market conditions.
The price target increase also comes on the heels of Antero Midstream Corp outperforming the overall equity market. The stock is up 22.22% year-to-date.
Antero Midstream Corporation (NYSE:AM) is a midstream energy company that owns, operates, and develops assets in the Appalachian Basin, primarily serving Antero Resources. These assets include gathering systems, compression facilities, processing, and fractionation plants.
9. Cameco Corporation (NYSE:CCJ)
Goldman Sachs Equity Stakes: $118.76 Million
Number of Hedge Fund Holders: 58
Cameco Corporation (NYSE:CCJ) is one of Goldman Sachs’ top energy stock picks. On June 20, RBC Capital reiterated an ‘Outperform’ rating on the stock. The research firm also increased its price target of the stock to C$100 from C$90.
The price target hike underscores RBC Capital’s conviction that Cameco is well-positioned to benefit from accelerating growth in the nuclear industry. Additionally, the firm expects the company to benefit from a tight uranium market, as it owns low-cost, tier-one assets that continue to operate efficiently.
A strategic partnership with Westinghouse positions Cameco to be a key beneficiary of emerging opportunities in the nuclear industry. RBC Capital also pointed out Westinghouse’s “mutually beneficial cooperation with Korean nuclear builders expected to present strategic opportunities that Cameco can capitalize on.”
Cameco Corporation (NYSE:CCJ) is a global provider of uranium fuel for nuclear power plants. It is one of the world’s largest uranium producers, with operations spanning the nuclear fuel cycle, from exploration and mining to refining, conversion, and fuel manufacturing.