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Ford Motor Co. (NYSE: F) has promised that its luxury car operation, the Lincoln Motor Company, eventually would rebound to a level where it is a global competitor in the high end of the market. While it has done well, particularly, in China, in its home market it posted remarkably poor sales in January, off 27% to 6,410. If not for a surge in sales of its new Navigator super sport utility vehicle (SUV), which almost doubled, the numbers would have been much worse.
Sales of the new Navigator, which Lincoln has heavily promoted, rose 98% to 1,288. It has a base price of $72,005. With the host of extra features available on the SUV, that price can reach $100,000.
Lincoln’s flagship, the Continental, posted a sales drop of 30% to 815. That means Lincoln sold only 26 Continental vehicles per day across the country in January.
Sales of the MKZ sedan and MKC, MKX and MKT SUVs all dropped. The SUV segment is one of the few that is growing in America as total U.S. car sales flatten.
Lincoln’s sales decline contrasts with strong sales among its German rivals, which are the companies it must beat to pick up market share. While Mercedes sales for January were down 0.3% to 27,498, BMW sales were higher by 5.0% to 19,016 and Audi sales rose 9.9% to 14,511. Even niche brand Porsche sold nearly as many vehicles in January as Lincoln did. Its sales were up 4.7% to 4,816.
Kumar Galhotra leads the Lincoln Motor Company for Ford. He has to be particularly disappointed in the U.S. results. Lincoln’s SUV and crossover based strategy has faltered in America. The size of its model line makes competition with its larger luxury rivals more difficult. The brand may sell well under 100,000 units in the United States this year.
Whatever recovery Ford management had hoped for in its home market seems less and less likely as time passes
Now that 2018 has begun, many investors have been contemplating how they want to be invested for this year and beyond. Despite 2017’s gains of 25% in the Dow and almost 19.5% in the S&P 500, the raging bull market continued its strong bullish trends into the new year by closing higher almost every single trading day so far. The reality is that this bull market is now nearing nine years old. Investors simply have no choice now to think about where they have and have not made money. Some companies and sectors have managed to perform quite poorly while the Dow and S&P 500 have both generated 300% returns since the panic selling lows of 2009.
It seems logical and safe to demand that for the bull market to keep rising some of the bull market’s lagging sectors will have to finally get on the winning side of the ledger. After all, you can’t just demand that the tech giants, financials and industrials rise indefinitely to carry this bull market endlessly higher. This is where the energy sector comes into play, oil and gas in particular.
Some of the energy stocks actually have started to see some rekindled interest, and their stocks started performing well in late 2017 and into the start of 2018. The problem with oil and gas companies of all sizes is that they have literally served up an empty plate for years. Many of their stocks are still down 25%, 50% and some even worse from just five years ago. The oil price dropping from $100 then to $80, and then toward $30, took a serious toll on energy investors and workers in the field. But now oil is back above $60. In fact, benchmark West Texas Intermediate crude is now above $64 a barrel and with Brent Sea crude is challenging $70 again. This is the highest that oil has been in years.
Many of the nimble oil and gas companies can lock in these higher prices for quite some time if they hedge properly, even if oil backs off later this year. And their costs of production in most cases are now far lower than just a few years ago, before oil’s recession hit the energy sector so hard.
24/7 Wall St. has tracked 14 major energy analyst calls in the major oil and gas stocks made so far in 2018 that should be given a second look. One alternative energy player was given a big call too, and its stock hit a six-year high. That makes for 15 energy stocks that could be worth considering for investors wanting some value, growth and perhaps a catch-up phase by one the bull market’s most disappointing sectors in the past five years. It’s time for the energy sector to do its part in the bull market in 2018.
Many investors are now thinking that there is deep value within the energy sector since the key names have lagged for so long. Until very recently, there has been little to no serious earnings support for oil or gas stocks. A higher base in oil prices, continued exports of natural gas in the years ahead, lower operating and drilling costs and seriously lower regulatory climate could all add up to a major victory for oil and gas stocks. And tax reform could help out as well. It also turns out that short sellers have even been backing away from their prior big bets against oil and gas stocks.
24/7 Wall St. covered the actual calls and added some color on each, along with trading reactions and how each of these stocks have performed. Consensus analyst target prices and other consensus data have been provided by Thomson Reuters. Here are 15 energy stocks that have received key analyst upgrades or big price target hikes calling for upside in the energy sector.
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Baker Hughes, a GE Company (NYSE: BHGE) has been held back because it is under General Electric. Still, investors are starting to finally see some positive comments. Baker Hughes shares closed at $37.20 on Friday, up from $34.44 a week earlier and from $31.64 at the end of 2017. That’s a gain of better than 17% so far in 201
Citigroup raised its target price on Baker Hughes to $42 from $40, and Cowen raised its target to $55 from $50 on January 11. Then on January 12 Wells Fargo raised its target to $43 from $40. Baker Hughes now has a consensus target price of $38.18.
Chevron Corp. (NYSE: CVX) was trading at $133.60 on Friday’s close, already beating its initial price targets for 2018. Now those targets are higher. 24/7 Wall St. has tracked numerous target hikes for Chevron so far in 2018. BMO Capital Markets raised its price target to $140 from $120 and raised its rating to Outperform. Wells Fargo also raised its target, to $129 from $117. Chevron was still downgraded at Merrill Lynch on January 4, but the price gain should speak for itself.
Chevron’s most recent close was up from $127.90 a week earlier and from $125.19 at the end of 2017. Its new consensus target price is $130.36.
Exxon Mobil Corp. (NYSE: XOM) also already has surpassed its consensus price target for all of 2018 in just the first two weeks. Last seen trading at $87.50, Exxon now has a consensus target price of $87.09, and frankly it feels like the target price hikes are still rather muted considering that this is way off of old highs. Exxon was a $86.75 per shares stock a week earlier and trading at $83.64 as of the end of 2017.
The big call on Exxon came from Merrill Lynch on January 4, when the firm’s big Buy rating came with a price target raised to $100 from $98. That’s a high among the largest brokerage firms on Wall Street. BMO Capital Markets raised its target price to $85 from $80 on January 11, and on the same day Wells Fargo raised its target to $88 from $84. At the end of 2017, Scotia raised its target to $94 as a Focus Stock for 2018.
Halliburton Co. (NYSE: HAL) was a tad lower on Friday, closing at $53.14, but it’s up from $51.82 a week earlier and is even further from the $48.87 close at the end of 2017.
Wells Fargo raised Halliburton’s target to $58 from 456 with an Outperform rating on January 12, and Cowen raised its target price to $55 from $50. Deutsche Bank raised its target to $56 from $54 on January 11. On January 5, Susquehanna raised its target to $60 from $56, and Citigroup raised its target to $59 from $54 on the same day. On January 4, Jefferies reiterated its Buy rating and took its target up to $57 from $51.
Occidental Petroleum Corp. (NYSE: OXY) ended last week at $76.53, up from $74.55 a week earlier and from the $73.66 2017 close-out price. Wells Fargo raised its price target to $87 from $77 with an Outperform rating on January 11. Goldman Sachs also reiterated its Buy rating on Occidental on January 11. On January 4, Merrill Lynch reiterated its Buy rating and raised its price objective from $79 to $80.
Schlumberger Ltd. (NYSE: SLB) is the king of oilfield services. At $77.97 on last look, its shares were up from $73.60 just a week earlier and $67.39 at the end of 2017. Wells Fargo raised its target to $83 from $72 with an Outperform rating on January 12, while on January 11 Cowen raised its rating to $85 from $80 and Deutsche Bank raised its target to $78 from $75. And on January 5, Citigroup raised its target to $80 from $76 with a Buy rating and Susquehanna raised its target to $84 from $79 with its Positive rating.
Valero Energy Corp. (NYSE: VLO) may be on the refining side of the energy sector, but at $96.75, it is up from $91.91 at the end of 2017. On January 11, Raymond James raised its target to $100 from $94 and Wells Fargo raised its target to $105 from $97. Morgan Stanley also lifted its target higher on the same day to $100 from $85. The largest Valero call came from Barclays on January 9, its target raised to $125 from $108. Valero’s consensus target price has jumped up to $93.05 on last look, up from $86 last month and from $78 in mid-October.
Additional analyst calls in the oil and gas sector follow.
Apache Corp. (NYSE: APA) may have had non-U.S. production targets that missed expectations, but U.S. production was at the high end of its range. Raymond James raised its Apache price target to $51 from $50 on January 11. A week earlier, Merrill Lynch raised its target price to $45 from $42. The traded at $47.16 on Friday’s close, up from $46.39 a week earlier and from $42.22 on the last day of 2017.
ConocoPhillips (NYSE: COP) traded at $60.05 on Friday, up from $56.88 a week earlier and from $54.89 at the end of 2017. Wells Fargo has an Outperform rating, and on January 11 the firm raised its target to $74 from $70.
Continental Resources Inc. (NYSE: CLR) was down marginally on the day at $57.66 on Friday. The king of the Bakken traded at $55.24 a week earlier and is up from $52.97 at the end of 2017. Continental Resources has seen multiple target hikes in the first days of 2018. Barclays raised its target to $58 from $53 on January 11, and Simmons raised its target to $57 from $45 on January 9. The larger call was by Merrill Lynch on January 4, when its price objective was raised to $65 from $53.
Noble Corp. PLC (NYSE: NE) already has risen sharply in 2018. Closing Friday at $5.77, it was at $5.06 a week earlier and $4.52 at the end of 2017. That’s a 27% gain in 2018 alone. Jefferies gave it a positive call on January 4 with a Buy rating and the target raised to $6 from $5. Does the firm already need to consider a higher target?
Phillips 66 (NYSE: PSX) closed at $104.97 on Friday, up from $101.15 at the end of 2017. Morgan Stanley raised its price target to $110 from $105 on January 11, and on the same day Wells Fargo raised its target from $100 to $105 and Raymond James raised its target to $100 from $94.
SM Energy Co. (NYSE: SM) recently made a big $500 million acreage sale in Wyoming’s Powder River Basin, and that compares with a $3 billion market cap. With it considered a Texas play now, multiple analysts chimed in. We covered it in more detail, but SM Energy’s ratings were raised and targets were hiked at Raymond James, Credit Suisse, Williams Capital, Merrill Lynch and RBC.
SM Energy shares were up marginally at $26.84 on Friday’s close, but that is up 10% from $24.15 a week earlier and a much sharper 20% from the $22.08 close-out price of 2017.24/7 Wall St.
Jefferies 5 Top Buy-Rated Oil Field Services Stocks for 2018
Transocean Ltd. (NYSE: RIG) was given a big upgrade to Buy from Hold at Jefferies on January 4, and the firm raised its target to $13 from $11. Also seen in recent days, Cowen raised its price target to $11 from $8, while Simmons raised its target to $11 from almost $8. Transocean closed at $12.20 on Friday, up from $11.61 a week earlier and from $10.68 at the end of 2017.
First Solar Inc. (NASDAQ: FSLR) is far from being an oil and gas company, and it often gets classified as a technology company by many screeners. That being said, First Solar is the top U.S. solar energy panel maker, so we’ll just go ahead and say they drill for solar panels for a laugh.
Its shares were down 4% at $73.20 late on Friday after its stock hit a six-year high of $76.61 on Thursday. This was a $67.52 stock at the end of last year, and that means that its shares rallied 13% from the end of 2017 to the peak before profit taking. A firm called Vertical Research started First Solar with a Buy rating on January 11. The analyst came from a different research firm prior to this call, and he believes that First Solar’s shares are deeply undervalued, even considering its huge surge in the past year.
Daniel Cullinane CPA p 848-250-9587
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