NEW YORK (TheStreet) -- Unless you're living under a rock, you know that energy prices tumbled in 2014. And while that's a win for consumers -- most notably in the form of lower gas prices -- it's a problem for energy companies, from oil producers to oil servicers to banks that have large exposure to energy loans.

Still there are plenty of companies worth investing in within the sectors and now could be an especially good time to buy with other investors fearful. Credit Suisse (CS) analysts came up with nine best investment ideas.

The analysts put forth best investment ideas in a variety of sub-sectors for the next six to 12 months, in a report issued Wednesday. Analysts were allowed to choose up to three stocks in their coverage area. The exercise resulted in a list of 140 top stock ideas -- 29 are small cap (under $4.1 billion), 56 are SMID (under $9.6 billion), and 81 are mid cap ($2-27.1 billion), the report said.

TheStreet paired Credit Suisse's investment perspectives on the stocks with ratings from TheStreet Ratings, its proprietary research tool, to give an added perspective on the stock picks.

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Here are Credit Suisse's top picks for the energy and utilities sectors. And when you're done make sure to check out Credit Suisse's top consumer stock picks. Year-to-date returns are based on March 5, 2015 closing prices.

SUNE Chart SUNE data by YCharts

1. SunEdison (SUNE)
Sub-industry: Clean Tech
Market Cap: $6.3 billion
Target Price: $34
Year-to-date return: 18.8%

Credit Suisse's Patrick Jobin said: SunEdison's solar project business is at an inflection point of growth as the company delivers on their solar project pipeline and expands into wind and smaller-scale distributed rooftop solar projects. The company is well positioned with significant benefits of scale, cost of capital advantages given their recently-launched YieldCo vehicle, a low-cost poly JV with Samsung and a road-map to further cost reductions. While the inflection point in project completions will be the primary catalyst, we believe dropping projects down to TerraForm (TERP), additional third-party asset acquisitions, launching an international focused YieldCo, asset backed securitizations (ABS) and reaching initial Incentive Distribution Rights splits (IDRs) will make the cash generation potential of SunEdison become increasingly clear and enable realization of our SOTP-based value of $34/share.

TheStreet Ratings said: TheStreet Ratings team rates SUNEDISON INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate SUNEDISON INC (SUNE) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SUNE's revenue growth has slightly outpaced the industry average of 10.7%. Since the same quarter one year prior, revenues rose by 10.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • SUNEDISON INC has improved earnings per share by 16.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SUNEDISON INC reported poor results of -$4.42 versus -$2.39 in the prior year. This year, the market expects an improvement in earnings (-$1.38 versus -$4.42).
  • The gross profit margin for SUNEDISON INC is currently lower than what is desirable, coming in at 29.07%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, SUNE's net profit margin of -39.67% significantly underperformed when compared to the industry average.
  • The debt-to-equity ratio is very high at 4.85 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SUNE has a quick ratio of 0.54, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

 

 

 

TSO Chart TSO data by YCharts

2. Tesoro Corp. (TSO)
Sub-industry: Independent Refining
Market Cap: $11.2 billion
Target Price: $110
Year-to-date return: 20.1%

Credit Suisse's Ed Westlake said: Short term, refinery and outages on the west coast of the United States have led to supernormal crack spreads, which all things being equal should benefit TSO. Looking out a bit further, the large Carson synergies + logistics growth which fundamentally reposition TSO's cost position in its core West Coast business are not being priced into sell-side consensus and the stock, despite management delivery.

TheStreet Ratings said: TheStreet Ratings team rates TESORO CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate TESORO CORP (TSO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, attractive valuation levels, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 4566.66% and other important driving factors, this stock has surged by 81.69% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TSO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 2171.4% when compared to the same quarter one year prior, rising from -$7.00 million to $145.00 million.
  • Net operating cash flow has significantly increased by 67.72% to $317.00 million when compared to the same quarter last year. In addition, TESORO CORP has also vastly surpassed the industry average cash flow growth rate of -12.58%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TESORO CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

 

 

 

MRO Chart MRO data by YCharts

3. Marathon Oil Corp. (MRO - Get Report)
Sub-industry: Integrated Oil & Gas
Market Cap: $18.5 billion
Target Price: $32
Year-to-date return: -3.4%

Credit Suisse's Ed Westlake said: MRO should become increasingly free cashflow positive as the Eagle Ford production grows. The international business is already free cashflow positive with or without Europe. The Bakken/SCOOP will eventually be free cashflow positive also (assuming oil price recovery). MRO has taken its licks with peers in the downturn. However, MRO has higher multiple businesses within it (Eagle Ford, EG LNG, AOSP) and MRO's upstream cash margins have room to rise as shale production rises and the oil price recovers. As such, the stock is trading at an attractive discount to NAV relative to peers.

TheStreet Ratings said: TheStreet Ratings team rates MARATHON OIL CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MARATHON OIL CORP (MRO) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 146.9% when compared to the same quarter one year prior, rising from $375.00 million to $926.00 million.
  • The gross profit margin for MARATHON OIL CORP is rather high; currently it is at 50.38%. Regardless of MRO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MRO's net profit margin of 38.61% significantly outperformed against the industry.
  • The share price of MARATHON OIL CORP has not done very well: it is down 17.09% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter.
  • Despite the weak revenue results, MRO has outperformed against the industry average of 18.7%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • MARATHON OIL CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MARATHON OIL CORP increased its bottom line by earning $1.41 versus $1.32 in the prior year. For the next year, the market is expecting a contraction of 170.2% in earnings (-$0.99 versus $1.41).

 

ETE Chart ETE data by YCharts

4. Energy Transfer Equity LP (ETE)
Sub-industry: MLPs
Market Cap: $34.6 billion
Target Price: $78
Year-to-date return: 11.9%

Credit Suisse's John Edwards/Abhiram Rajendran said: Our top pick is ETE, which we believe is the best way to subscribe to the Energy Transfer Family Plan including the valuation uplift from the Lake Charles LNG Project. We continue to see very strong visibility on distribution growth helped by the large accretion coming from the ETP/RGP combination.

TheStreet Ratings said: TheStreet Ratings team rates ENERGY TRANSFER EQUITY LP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENERGY TRANSFER EQUITY LP (ETE) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 18.7%. Since the same quarter one year prior, revenues rose by 11.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ENERGY TRANSFER EQUITY LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ENERGY TRANSFER EQUITY LP increased its bottom line by earning $1.15 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $1.15).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 165.7% when compared to the same quarter one year prior, rising from -$172.00 million to $113.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENERGY TRANSFER EQUITY LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 167.74% and other important driving factors, this stock has surged by 42.98% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

 

DVN Chart DVN data by YCharts

5. Devon Energy Corp. (DVN - Get Report)
Sub-industry: Oil & Gas Exploration & Production
Market Cap: $25 billion
Target Price: $75
Year-to-date return: -0.62%

Credit Suisse's Arun Jayaram said: Within the context of a cautious near-term outlook for E&Ps given oil price risk through 1H15, we believe DVN is well positioned to Outperform given its defensive valuation, top quartile oil growth profile largely within cash flows, and further accretion potential from EnLink. We believe that DVN is at an operational tipping point for the stock, with improving results in the Permian and Cana, plus significant FCF from its Eagle Ford, Jackfish, and Barnett Shale assets. The key part of our favorable investment thesis on DVN hinges in our non-consensus view that there is a Concho Resources (CXO) lurking within DVN. CXO has been one of the industry leaders in value creation and sports an EV of $17 billion and DVN has a similar acreage footprint to CXO, has grown at comparable levels, and exhibited slighter better capital efficiency.

TheStreet Ratings said: TheStreet Ratings team rates DEVON ENERGY CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DEVON ENERGY CORP (DVN) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DVN's very impressive revenue growth greatly exceeded the industry average of 18.7%. Since the same quarter one year prior, revenues leaped by 128.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for DEVON ENERGY CORP is rather high; currently it is at 59.78%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.80% is in-line with the industry average.
  • The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that DVN's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DEVON ENERGY CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

 

 

 

SLB Chart SLB data by YCharts

6. Schlumberger (SLB - Get Report)
Sub-industry: Oil & Gas Exploration & Production
Market Cap: $108.4 billion
Target Price: $86
Year-to-date return: -0.69%

Credit Suisse's James Wicklund said: Geographic mix, industry-leading margins and Schlumberger's technology and ability to create and deliver solutions to customers across the globe is why it will outperform other service companies in 2015.

TheStreet Ratings said: TheStreet Ratings team rates SCHLUMBERGER LTD as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SCHLUMBERGER LTD (SLB) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.4%. Since the same quarter one year prior, revenues slightly increased by 6.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $3,913.00 million or 1.63% when compared to the same quarter last year. Despite an increase in cash flow, SCHLUMBERGER LTD's average is still marginally south of the industry average growth rate of 3.92%.
  • Despite currently having a low debt-to-equity ratio of 0.35, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.32 is sturdy.
  • SCHLUMBERGER LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SCHLUMBERGER LTD reported lower earnings of $4.30 versus $5.11 in the prior year. For the next year, the market is expecting a contraction of 10.5% in earnings ($3.85 versus $4.30).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Energy Equipment & Services industry. The net income has significantly decreased by 81.8% when compared to the same quarter one year ago, falling from $1,664.00 million to $302.00 million.

 

SALT Chart SALT data by YCharts

7. Scorpio Bulkers (SALT - Get Report)
Sub-industry
: Oilfield Services & Marine Transport
Market Cap: $463.4 million
Target Price: $10
Year-to-date return: 30.5%

Credit Suisse's Greg Lewis said: SALT is an asset price recovery story having ordered a fleet of 74 dry bulk ships last year. We believe SALT has the most leverage to the dry bulk recovery.

TheStreet Ratings does not currently rate SALT.

 

 

 

FANG Chart FANG data by YCharts

8. Diamondback Energy Inc. (FANG - Get Report)
Sub-industry: SMID Cap Oil & Gas Exploration & Production
Market Cap: $4.2 billion
Target Price: $91
Year-to-date return: 19.1%

Credit Suisse's Mark Lear said: FANG remains a top pick within our SMID Cap coverage universe as we maintain our view that it is the best positioned from an asset performance and liquidity standpoint. Highlights from the 4Q14 call include a 52% increase in the company's Midland County Lower Spraberry type curve and strong results from its initial 500' spacing test suggesting 25% upside to inventory in the zone. While we already had an inkling that the Lower Spraberry was going to compete with some of the best projects in US shale, this was confirmed by the company's reserve auditor which raised its two-stream reserve estimate 52% to 990 Mboe in Midland County. Better yet, results in the zone appear just as good in NE Andrews County and infill results suggest optimal spacing at ten wells per section compared to current inventory estimates based on eight wells in the core. Assuming $6.5MM well costs and a 1.1 MMboe three-stream EUR, we estimate the Lower Spraberry delivers a project NPV of $9.5MM and ATAX IRR of 53% at the futures strip.

TheStreet Ratings said: TheStreet Ratings team rates DIAMONDBACK ENERGY INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DIAMONDBACK ENERGY INC (FANG) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in stock price during the past year, compelling growth in net income, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • FANG's very impressive revenue growth greatly exceeded the industry average of 18.7%. Since the same quarter one year prior, revenues leaped by 73.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 390.3% when compared to the same quarter one year prior, rising from $20.12 million to $98.67 million.
  • Net operating cash flow has significantly increased by 62.78% to $104.39 million when compared to the same quarter last year. In addition, DIAMONDBACK ENERGY INC has also vastly surpassed the industry average cash flow growth rate of -12.58%.
  • The gross profit margin for DIAMONDBACK ENERGY INC is currently very high, coming in at 74.47%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, FANG's net profit margin of 74.98% significantly outperformed against the industry.

 

PCG Chart PCG data by YCharts

9. PG&E Corp. (PCG - Get Report)
Sub-industry
: Utilities
Market Cap: $24.6 billion
Target Price: $63
Year-to-date return: 1.1%

Credit Suisse's Dan Eggers said: We see opportunity in PCG shares as they eventually resolve San Bruno and put to rest the multi-year overhang; more importantly from a longer-term investment perspective, we are encouraged by the structural improvements over the last 3.5 years that are taking hold and should position PG&E as a quality, growth utility that will drive EPS growth of 4-6%, a 3.4% dividend yield that will start to grow again, and a valuation relative to peers that is attractive even assuming a tough San Bruno resolution.

TheStreet Ratings said: TheStreet Ratings team rates PG&E CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate PG&E CORP (PCG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 8.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • PG&E CORP has improved earnings per share by 42.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PG&E CORP increased its bottom line by earning $3.04 versus $1.84 in the prior year. This year, the market expects an improvement in earnings ($3.51 versus $3.04).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multi-Utilities industry. The net income increased by 50.0% when compared to the same quarter one year prior, rising from $90.00 million to $135.00 million.