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5 Energy Stocks That Goldman Sachs Loves

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2. Cenovus Energy (CVE - Get Report) is a Canadian oil-and-gas and oil-sands company. It also has an interest in several U.S.-based refineries, in Texas.

Cenovus shares have appreciated 28% in the past 12 months and are up 7.9% in 2011. Cenovus missed Goldman's first-quarter adjusted earnings and cash flow targets by a significant margin, but Goldman reiterated that Cenovus is a " Conviction List top pick."

Goldman sees regulatory approval for its Christina Lake expansion as a catalyst for the stock, in addition to a "top-tier oil-production growth outlook."

Like Diamond Offshore and First Solar, Goldman has a six-month, rather than 12-month, target on Cenovus, forecasting that its equity will advance 50% to $54. The stock trades at a premium to peers, at a book value multiple of 3.2 and a cash flow multiple of 10.

But, Goldman expects its oil-sands projects to yield significant cash flow in the next 12 months, boosting the share price. Also, "a possible transaction with a third party to 'bring forward' the value of long-dated oil-sands resource" may help investors realize upside.

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CBI $48.69 1.23%
CVE $16.42 -2.78%
DO $26.62 -0.45%
FSLR $59.61 -0.02%
GS $188.06 0.44%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

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