Merrill Lynch offers energy themes to watch, and stocks to capitalize, in 2014

Energy stocks have underperformed this year, but Merrill Lynch analysts are reasonably positive on the sector for 2014, pointing to some key themes:

With the price of gas likely to remain in a narrow range next year, the firm says investors should buy high-quality, large resource-based stocks such as COG and RRC.

The net asset value race is over, and the coming year is about execution, ML says, seeing PXD and WLL as winners here.

Following 2013's wave of activism, the firm sees gains in HES and OXY.

Favorable outlooks for E&P budgets could lift oilfield services stocks focused on North America, such as HAL and SLB.

The ML team sees crude production rising to the highest level since 1989, and pinpoints TSO and VLO as the refiners to benefit the most in 2014 because they're crude-advantaged and have stock-specific catalysts.

Finally, the firm suggests investors with significant gains in CVX may want to take those and buy XOM for 2014.

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Comments (9)
  • ckliemt
    , contributor
    Comments (59) | Send Message
    Take gains from CVX? Has it had any? I think it is probably a buy.
    24 Dec 2013, 02:27 PM Reply Like
  • cfg3450
    , contributor
    Comments (86) | Send Message
    We have numerous energy stocks to pick from in 2014.
    Those that are bring in a lot of new crude are usually good.
    Some in this category ...EOG - PXD - DVN - CXO -CLR.


    Good dividend stocks with less risk ...CVX - RDS.A - TOT - BP - COP - XOM.


    Hopefully, 2014 should be a good year with perhaps a sell-off or two.


    24 Dec 2013, 03:31 PM Reply Like
  • sl100
    , contributor
    Comments (112) | Send Message
    Xom for cvx is ridiculous recommendation. Xom has a lot of issues as they held up buying assets and now have to spend a lot to grow. It's also at 52 week high. Also too much oil and gas coming online so energy sector is going to be weak in the coming years.
    24 Dec 2013, 06:17 PM Reply Like
  • rjj1960
    , contributor
    Comments (1472) | Send Message
    DVN, MRO,PXD are my horses next year.
    24 Dec 2013, 08:35 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (7055) | Send Message
    What about (CVRR)? If (VLO) and (TSO) does well, (CVRR) should also do well.


    (PXD) has already made a good run.;c=


    I think (PVA) and (LNG) will be top performers.
    24 Dec 2013, 10:17 PM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
    the energy complex is very supportive of growth going forward here...and so far has been a deflation preventer though that could change if prices start to correct dramatically to the downside as they already have in all the other commodity markets. with the Fed now in effect tightening (and yes, taper is tightening) obviously commodity names will continued to be pressured well into 2014. I would not be a buyer. Having said that come summer there might be some interesting "vulture plays" in the resource complex. I think the interesting "story stock" will remain Tesla. Any dramatic change in input prices to the downside for Tesla could create a lethal combination of both build out and margins that could propel this quite tiny automobile company to dramatically higher levels. Any news on Elon Musk's "giga factory" should be followed.
    24 Dec 2013, 10:51 PM Reply Like
    , contributor
    Comments (15) | Send Message
    XOM is a good dividend stock and it is way undervalued.
    25 Dec 2013, 04:45 PM Reply Like
  • treyminator
    , contributor
    Comments (85) | Send Message
    Sell CVX and buy XOM? Merrill's analysts simply following Buffett's decision that XOM is a buy. Buffett, however, made his decision back in July when XOM was in the 80's. No real explanation given for selling CVX - real insightful stuff. CVX bringing Wheatstone and Gorgon projects on line in near future, with gas sales pegged to oil prices. This means company's future revenues will increase due to end to expenses with those projects and sales starting up. CVX not near all time high and has greater oil mix than XOM on percentage of production basis. CVX is a BUY - not a sell. XOM also good company with solid long term growth plans. The better suggestion is buy both companies. And they pay analysts good money for these self-proclaimed good suggestions!
    26 Dec 2013, 08:41 AM Reply Like
  • BuffaloBell
    , contributor
    Comments (589) | Send Message
    The advantage goes to XOM recognizing that starting 2014 some of their previous capital invested projects come on-stream. Over the past 10 years XOM has invested much more money than CVX in energy related projects. As these projects start revenues and profits will increase. Buffett knows this. He is interested in a company's outlook to improve business results and sustain increasing dividends long-term.
    26 Dec 2013, 09:24 AM Reply Like
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