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Five Energy Stocks to Buy Amid Correction

Occidental Petroleum, Concho Resources, Spectra Energy, GeoResources and Chevron are rated 'buy' at TheStreet.
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BOSTON (TheStreet) -- BP's (BP) - Get BP p.l.c. Sponsored ADR Report devastating oil spill has accelerated a drop in energy stocks. The Dow Jones U.S. Energy Sector Index has fallen 13% in the past month. These five energy stocks rank atop the industry, according to TheStreet's stock model.

5.

Chevron

(CVX) - Get Chevron Corporation Report

is a global integrated oil and gas company. Chevron has a market value of $148 billion and is one of the two energy constituents in the

Dow Jones Industrial Average

, along with

Exxon Mobil

(XOM) - Get Exxon Mobil Corporation Report

. Chevron gets a "hold" rating from

TheStreet

.

Quarter

: First-quarter profit surged 148% to $4.6 billion, or $2.27 a share, as revenue grew 35%. The operating margin widened from 6.2% to 15%. Chevron has $11 billion of cash and $10 billion of debt, converting to a debt-to-equity ratio of 0.1.

Stock

: Chevron has advanced 7% during the past year, trailing U.S. stock-market indices. It trades at a price-to-projected-earnings ratio of 7.2 and a price-to-sales ratio of 0.9, 41% and 87% discounts to peer averages. It's also cheap based on cash flow.

Consensus

: Of analysts covering Chevron, 19, or 76%, rate its stock "buy" and six rate it "hold." None rank it "sell."

Barclays

(BCS) - Get Barclays PLC Sponsored ADR Report

offers a price target of $105, leaving a potential return of 42%.

Citigroup

(C) - Get Citigroup Inc. Report

expects the stock to gain 31% to $97.

4.

GeoResources

(GEOI)

is an independent U.S. oil and gas company. Since 2007, it has more than doubled revenue and earnings each year, on average. The company has a market value of $282 million, placing it in the small-cap category.

Quarter

: First-quarter profit increased more than 10-fold to $6.1 million, or 30 cents, as revenue doubled. The operating margin jumped from 1.9% to 38%. GeoResources has $18 million of cash and $69 million of debt, equal to a debt-to-equity ratio of 0.4.

Stock

: GeoResources has advanced 59% during the past 12 months, outpacing benchmarks. It sells for a price-to-projected-earnings ratio of 8.9 and a price-to-sales ratio of 3.3, 27% and 50% discounts to peer averages. It's also cheap based on book value.

Consensus

: Of the four researchers following GeoResources, all of them rate its stock "buy."

Rodman & Renshaw

(RODM) - Get Hartford Multifactor Developed Markets (ex-US) ETF Report

forecasts that the stock will rise 61% to $23.

Wunderlich Securities

says it will touch $22.

3.

Spectra Energy

(SE) - Get Sea Ltd. (Singapore) Sponsored ADR Class A Report

owns a portfolio of U.S. and Canadian natural-gas assets, and engages in gathering, processing, transmitting, storing and distributing. During the past three years, Spectra has grown revenue 21% annually, on average.

Quarter

: First-quarter profit increased 20% to $358 million, or 53 cents, as revenue expanded 6.9%. The operating margin extended from 31% to 33%. Spectra holds $158 million of cash and $10 billion of debt, translating to a debt-to-equity ratio of 1.3.

Stock

: Spectra has appreciated 18% during the past year, more than the

S&P 500 Index

TheStreet Recommends

. It trades at a price-to-projected-earnings ratio of 12 and a price-to-cash-flow ratio of 7.8, modest discounts to peer averages. Shares offer a 5% dividend yield.

Consensus

: Of firms rating Spectra, eight, or 50%, advocate purchasing its shares, seven recommend holding and one suggests selling them.

RBC

(RY) - Get Royal Bank of Canada Report

predicts that the stock will climb 47% to $29.

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. (GS) Report

expects it to rise 32% to $26.

2.

Concho Resources

(CXO) - Get Concho Resources Inc. Report

develops oil and gas properties, principally in the Permian Basin of New Mexico and West Texas. Permian is the largest onshore basin in the U.S. Since 2007, Concho's stock has achieved annualized gains of 19%, beating indices.

Quarter

: Concho swung to a first-quarter profit of $68 million, or 75 cents, as revenue more than doubled. The operating margin climbed from the negatives to 50%. Concho carries $626 million of debt, converting to a debt-to-equity ratio of 0.4.

Stock

: Concho has advanced 68% during the past year, outpacing benchmarks by a wide margin. It sells for a price-to-projected-earnings ratio of 16 and a price-to-sales ratio of 7.1, premiums to industry averages. Its quarterly net margin hit 32%.

Consensus

: Of analysts covering Concho, 17, or 71%, advise purchasing its shares and seven recommend holding them.

Raymond James

(RJF) - Get Raymond James Financial, Inc. Report

offers a price target of $78, leaving a potential return of 45%.

SunTrust

(STI) - Get SunTrust Banks, Inc. Report

believes the stock will hit $73.

1.

Occidental Petroleum

(OXY) - Get Occidental Petroleum Corporation Report

is an integrated oil and gas company based in California. It retained profitability during the recently ended recession while competitors, including

ConocoPhillips

(COP) - Get ConocoPhillips Report

and

Total

(TOT) - Get Total SA Sponsored ADR Class B Report

, succumbed to net losses.

Quarter

: First-quarter profit nearly tripled to $1.1 billion, or $1.32, as revenue expanded 55%. The operating margin stretched from 19% to 37%. Occidental has $1.9 billion of cash and $2.6 billion of debt, equal to a modest debt-to-equity ratio of 0.1.

Stock

: Occidental has risen 19% during the past year, beating the Dow and S&P 500. It trades at a PEG ratio, a measure of value relative to expected growth, of 0.3, a 70% discount to estimated fair value. It's also cheap based on projected earnings.

Consensus

: Of firms rating Occidental, 18, or 82%, rate its stock "buy," three rate it "hold" and one ranks it "sell."

Morgan Stanley

(MS) - Get Morgan Stanley (MS) Report

values Occidental at $107 a share, implying that 30% of upside remains.

UBS

(UBS) - Get UBS Group AG Report

thinks the stock is worth $103.

-- Reported by Jake Lynch in Boston.