Goldman's 5 Best Energy Stocks for 2011

Occidental Petroleum (OXY), one of the largest oil and gas companies in the U.S., and with global exploration interests, gets some of the strongest ratings from Goldman, as well as a $105 price target, worth a 6% premium one month ago.

The company just reported fourth-quarter earnings of $1.61 per share, easily besting the Thomson Reuters consensus of $1.55. Income from continuing operations was $1.2 billion, a 29% increase from a year earlier, as a result of higher oil prices and increased production volumes, which were offset by lower natural gas prices. Standard & Poor's said analysts' consensus estimates for fiscal 2011 is for 30% earnings growth to $7.33 per share.

Goldman says the company shows several positive trends, including return on capital, a strong production outlook, a healthy balance sheet and substantial cash flow.

And Occidental Petroleum's recent announcement that it is moving forward with a huge shale oil-development program in California should fuel long-term prospects once it gets into production.

But Standard & Poor's analysts have its shares rated "hold," noting that: "We believe its strengths are limited by participation in volatile, competitive and capital-intensive businesses, and (it has) a penchant for debt-financed acquisitions."

A summary of analysts' ratings by S&P resulted in seven "buy" ratings, 12 "buy/holds" and five "holds." Shares are down 1% this year.

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