- Exxon's risk/reward profile is particularly appealing, and it's looking like the low is already in.
- With the solar industry bottoming out, Enphase shares should be starting a fresh uptrend.
- Duke's earnings potential is strengthening, and the current rally has legs.
Last night saw the S&P 500 index close at a fresh all-time high. It's a remarkable achievement that didn't look as likely as recently as October. But since the prospect of a rate cut became quite real in November, a wave of risk-on sentiment has swept equities.
When stocks trade as bullishly as they are right now, it can be hard to pick the best of the bunch, as pretty much everything is going up. One way to sort through the noise is to watch stock analysts' upgrades. With energy prices in the spotlight, energy stocks have caught analysts' attention. Here are three energy stocks with recent upgrades worth watching closely.
Exxon Mobil Corporation
We wrote last week about how oversold Exxon Mobil Corp (NYSE:XOM) shares were looking and how the risk/reward profile became increasingly attractive after the stock had dropped 20% since September's all-time high. It hasn't taken too long for the Wall Street heavyweights to come to the same conclusion.
Yesterday, the team at TD Cowen upgraded its rating on Exxon, moving the stock from a "market perform" rating to "outperform." The team feels that overdone selling has taken place, and there are simply too many tailwinds for the stock not to rally soon. Exxon's fresh cash flow should keep increasing, while the ongoing share repurchase program shows no signs of slowing down.
Exxon looks leaner, with expenses continuing to come in line. The company set a fresh price target of $115, which points to an upside of around 20% from current levels. Shares have started bouncing, and it looks like last week's low is already turning into a bottom.
Enphase Energy Inc.
Enphase Energy Inc (NASDAQ:ENPH) looks like a fresh rally is about to kick off, and this could be a phenomenal entry point. The team at Truist Securities upped their rating on Enphase shares yesterday, moving the stock to a Buy rating while also giving it a price target of $145. Enphase closed Tuesday's session at $111, which points to an upside of at least 30%.
This should tempt even the more solar-skeptical investor, with Truist pointing to the improving industry conditions and Enphase's strong market position as reasons to be excited. Global demand for solar power is stabilizing, with demand set to pick up throughout 2024 and into 2025.
Duke Energy Corporation
Among the large-cap utility names, Duke Energy Corporation (NYSE:DUK) has the best total return potential by the team at Evercore ISI. It upgraded its rating on the Charlotte headquartered stock yesterday and is particularly bullish on Duke's earnings results through the rest of the year and into 2025.
Duke Energy's $108 price target points to an upside of at least 12% from current levels and were Duke shares to hit this in the coming weeks, it would have decisively broken the downtrend weighing on the company since 2022. At the same time, investors can benefit from a juicy 4.27% dividend yield that shows no signs of going anywhere.
The company reported record quarterly revenue in Q4, and last October's low looks more and more like a long-term bottom. The 15% that shares have gained in the meantime are well positioned to gain that again.