BOSTON ( TheStreet) -- There's no stopping the energy sector's juggernaut over the past year, and Goldman Sachs' ( GS) analysts say it's not too late to jump on the bandwagon.
A few of the investment bank's list of top buys have potential gains of as high as 42 % in the next six months. The rapid rise in oil prices have contributed to the outperformance. Oil is selling for about $112 a barrel, up from about $75 in late August due to rising demand in the U.S. in China and global events, such as uprisings in the Middle East and North Africa, that have trimmed production there.
As a result, energy stocks, which include oil, coal, gas and alternative energy, have returned 14% this year and 27% over the past 12 months through April 26, as tracked by Morningstar. The S&P 500 Index is up 7.7% and 13%, respectively. Goldman Sachs is particularly bullish on the oil industry, which includes everything from exploration and oil-field services to the largest, vertically integrated companies such as ExxonMobil ( XOM). "Barring an unexpected hit to the world economy such as the housing/financial crisis of 2008-2009, we think oil markets will remain strong at least through 2012," said the Goldman oil-industry report of April 17. The firm has a "conviction list" of its highest-rated stocks, all of which are rated "buy." It relies on asset-value and cash-flow valuations to set its price targets. Five of Goldman Sachs' conviction-list "buys" for the energy industry follow (note that their price targets are for six months):