10 Energy Stocks With Upside

NEW YORK (TheStreet) -- CNOOC (CEO), Trina Solar (TSL), Sinopec (SNP), Halliburton (HAL), JA Solar Holdings (JASO), Complete Production Services (CPX), STR Holdings (STRI), InterOil (IOC), TransAtlantic Petroleum (TAT) and ReneSola (SOL) are energy stocks with potential upside of up to 66%, calculated on analysts' average 12-month price targets. The above stocks received buy ratings of 60% to 91%.

The simmering Middle East and North African political unrest has sent tremors through the energy sector, with crude oil prices crossing the triple-digit price threshold. Supplies from Libya are at a near standstill; however, Saudi Arabia has assured the international market of extra supply. WTI Crude hit $97 per barrel, while Brent crude settled at $112 per barrel.

We have identified 10 energy stocks that received top buy ratings and have the potential to deliver attractive returns. These stocks returned an average 43% during the last one year on superior fundamentals. Analysts' consensus estimate indicates a potential 18%-66% upside over the next one year.

10. CNOOC ( CEO) is a China-based producer of offshore crude oil and natural gas. The company has four offshore production fields in China and operates upstream assets in Nigeria and Australia.

Revenue rose 64% year-over-year during 2010 third quarter, benefiting from increased oil and gas production. Average realized oil price increased 9.3% year-over-year to $74.15 per barrel for the September quarter, while realized gas price was $3.96 per thousand cubic feet during the same period.

For 2010 third quarter, the company reported net production of 88.7 million barrels of oil equivalent, representing a 48.8% increase year-over-year. This increment can be attributed to production ramp up at projects that have come on-stream since 2009 and contribution from newly acquired projects.

Annual production is expected to surpass the targeted 319 to 329 million barrels oil equivalent. The stock has analysts' buy ratings of 75% and is trading at 12.6 times its estimated 2011 earnings.

9. Sinopec ( SNP) is a China-based integrated oil and gas, and chemicals company.

Revenue jumped 60% during the first nine months of 2010, while net income improved 11% during the same period. The company produced 35 million barrels of crude oil and 8.9 billion cubic meters of natural gas, representing an increase of 1.9% and 45.0% during the same period last year, respectively.

The company owns eight of the top ten refineries in the country. With the government's new refined oil pricing mechanism since 2008, Sinopec's refining business has turned around after years of loss making.

As per analysts polled by Bloomberg, the stock has 75% buy rating. Upstream asset injections from parent company and changes to refined product pricing mechanism are probable triggers. The stock appreciated 29% during the last one year and consensus estimates expect a 21% increase over the next one year. The stock is trading at 8.2 times its estimated 2011 earnings.

8. Halliburton ( HAL) provides services related to exploration and production of oil and natural gas.

Strong North American and international operations churned robust top-line performance, boosting fourth quarter top-line. Consolidated revenue increased to $5.2 billion from $3.7 billion in 2010 fourth quarter. Net income more than doubled to $605 million from $243 million during the same quarter last year.

Commenting on improved North American operations, Dave Lesar, chairman, president and CEO said, "In North America, revenue and operating income increased 10% sequentially, outpacing the United States rig count growth of 4%. This 10% sequential growth is particularly noteworthy given the significant offsetting impact on revenue and operating income due to the fourth quarter decrease of activity in the Gulf of Mexico."

Of the 34 analysts covering the stock, 31 recommend a buy. Analysts are positive on the stock and delivered an appreciation of 53% in the last one year. The stock is trading at 16.1 times its estimated 2011 earnings.

7. Complete Production Services ( CPX) supports oil and gas companies to develop hydrocarbon reserves.

During the fourth quarter, net income jumped seven-fold to $38 million from $5 million in the previous quarter. The company reported fourth quarter revenue of 13% to $473 million over the prior quarter.

For full year 2010, net revenue was $1.6 billion, up 48% year-over-year. While net income was $84 million. Outlining the company's strategy for 2011, Joe Winkler, chairman and CEO, said in a press statement, "We continue to enhance platform through capital investments, acquisitions and operational achievements, such as obtaining firm customer commitments for approximately 185,000 HHP of pressure pumping equipment that will be deployed throughout the course of 2011."

Based on consensus estimates, the stock is expected to deliver 24% in a year's time, and is currently trading at 11.4 times its estimated 2011 earnings.

6. Trina Solar ( TSL) is a China-based solar-power products manufacturer with a distribution network in Europe, North America and Asia.

Solar module shipments during 2010 fourth quarter were approximately 351 MW, up 114.3% year-over-year. Net revenue was $641.8 million, a 104.9% year-over-year increase. Gross profit was $201.8 million, escalating 97.4% year-over-year.

Gross margin was 31.4%, slightly lower compared to 32.6% in the fourth quarter of 2009. Operating margin was 22.6%, compared to 20.6% in the prior year fourth quarter.

Net income was $145.3 million, which included a net foreign currency exchange gain, compared to net income of $48.8 million during the fourth quarter of 2009.

Jifan Gao, CEO Trina Solar, said in a press statement, "Our growth in 2010 demonstrates the successful execution of our strategy to expand sales across distribution segments and geographic end markets in North America and other exciting photo voltaic markets such as India, Australia and China." The stock is trading at 6.5 times its estimated 2011 earnings.

5. JA Solar Holdings ( JASO) is a China-based manufacturer of high-performance solar power products.

Total shipments for 2010 fourth quarter were 463 megawatt (MW); shipments grew 100% from 231MW, compared with the same period last year. Shipments registered sequential growth of 11% with third quarter shipments of 418 MW.

Revenue for 2010 fourth quarter came in at $584.3 million, increasing 137% from $246.5 million registered in the fourth quarter of the prior year. Besides, revenue marked an increase of 6.6% registered in the third quarter of 2010.

Gross profit in the fourth quarter of 2010 was $112.2 million, compared with $50.8 million in the fourth quarter of 2009. Gross margin was 19.2% in the fourth quarter of 2010, compared with 20.6% in the fourth quarter of 2009.

Based on demand, JA Solar expects total cell and module shipments to exceed 2.2GW in 2011, representing an increase of around 50% from 2010. The stock is trading at five times its estimated 2011 earnings.

4. STR Holdings ( STRI) is a leading global provider of solar encapsulants to the photovoltaic module industry.

Consolidated net sales for the third quarter rose 45.2% year-over-year to $97.8 million. For the first nine months of 2010, net sales rose 48.2% to $274.2 million in the same period a year ago.

Third quarter 2010 consolidated gross profit rose 48.7% to $37.7 million. Nine months gross profit rose 62.7% to $107.1 million in the first nine months of 2009.

Net income for 2010 third quarter rose 68.9% to $13.3 million and year-to-date net income stood at $36.1 million, up 155.5% from $14.1 million for the same period in 2009.

The stock appreciated 10% during the last one year. Of the 10 analysts covering the stock, 6 maintain a buy rating. Overall, analysts expect the stock to deliver an upside of 38% over the next one year. The stock is trading at 12 times its estimated 2011 earnings.

3. TransAtlantic Petroleum ( TAT) is a vertically integrated international oil and gas company engaged in the acquisition, development, exploration and production of crude oil and natural gas.

Net production amplified by 5% during the third quarter of 2010, compared to the second quarter of 2010, while net natural gas production increased quarter-to-quarter by 45%.

The company announced the acquisition of Thrace Basin in November. Speaking about the acquisition, N. Malone Mitchell, 3rd, the company's chairman, said, "We would complete our presence in the Thrace Basin with additional acreage and an operational base on the southern flank of the basin. This would expand our inventory of shallow gas targets and is a very attractive area for deeper conventional and unconventional gas. In addition, the oil field service equipment will serve us well as we continue to ramp up our activity in Turkey."

Analysts expect the stock to deliver an up side of 40% with a buy rating of 83%.

2. InterOil ( IOC) is an integrated energy company operating in the Pacific region in segments like upstream, midstream and downstream.

Revenue for the third quarter was up 20% year-over-year to $208.5 million. InterOil's earnings before interest, taxes, depreciation and amortization for the same quarter was a loss of $8.6 million, compared with a loss of $18.6 million for the same period of 2009, an improvement of $10 million.

Net loss for the third quarter was $14.4 million, compared with a net loss of $25.3 million for the same quarter in 2009, a $10.9 million improvement compared to the equivalent quarter in the prior year.

As per Bloomberg analysts' consensus, the stock has a buy rating of 83%. Analysts also expect the stock to deliver an upside of 44% over the next one year.

1. ReneSola ( SOL) is a China-based manufacturer of solar wafers and solar module products.

Net revenue during the third quarter of 2010 was up 41% on record solar wafer shipments, up 26% from the second quarter. Net income grew 67% year-over-year, boosted by foreign exchange gains.

Julia Xu, ReneSola's CFO, added, "Our ongoing emphasis on improving manufacturing efficiencies has led to another quarter of improved margins and a substantial increase in our top and bottom line results. Additionally, our strong cash flow generation and prudent capital expenditures have resulted in a net cash balance of $286.6 million for the first nine months of 2010, improving our capital structure and positioning us well for further expansion in 2011." Accordingly, operating margins have improved to 24.1% from 20.6% in the second quarter. For the full year, SOL expects solar wafer and module shipments of 1.6-1.7 giga watt for 2011 compared to a 2010 target of 1.13-1.15 giga watt.

The stock gained 113% during the last one year, after receiving analysts' buy rating of 73%. The scrip is trading at 5.7 times its estimated 2011 earnings.

>To see these stocks in action, visit the 10 Energy Stocks With Upside portfolio on Stockpickr.

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