Suncor Energy added to Conviction Buy List at Goldman

|About: Suncor Energy Inc. (SU)|By:, SA News Editor

Suncor Energy (SU +1.7%) is higher after Goldman Sachs adds the stock to its Conviction Buy List and assigns a $38 price target, forecasting that revenue from its new Hebron field and Fort Hills projects will mean more production and cash flow.

Goldman believes SU has the ability to not just break even, but generate "strong" free cash flow, perhaps even at lower oil prices following the company's strides in lowering its cost of production in recent years; the firm thinks SU would apply the cash to stock buybacks and dividend hikes.

Even with the cost advantage, Goldman believes investors are undervaluing SU shares, and that the stock trades at an attractive discount to peers.

Other Goldman favorites among oil and gas producers and refiners are Marathon Petroleum, Valero Energy, Husky Energy and Chevron.