UBS recently unveiled a list of its top energy picks for the remainder of the year, featuring a mix of established players and emerging stars in the sector. This article will dive into the details of the firm’s recommendations and explore the reasons behind their confidence in these particular stocks.
NextEra Energy and First Solar are two companies highlighted by UBS for their direct exposure to AI-driven electricity and data center demand. NextEra Energy stands out as the top pick in the electric utilities subsector, thanks to its leading position in renewables development and strong balance sheet. With a $90 price target set by UBS analysts, the stock is expected to deliver a 15.1% jump. On the other hand, First Solar, with a $350 price target and a 26.5% upside potential, is positioned to benefit from the increasing demand for renewable energy and its unique technology that aligns with ongoing structural themes like AI-driven electricity growth.
Formerly known as Schlumberger, SLB is UBS’s top pick in the oil services and equipment category. Despite a 12% decline in its stock this year, UBS sees a massive 49.2% potential upside with a $68 price target. The company’s high margin Digital and Integration unit, along with an improved balance sheet, are cited as key factors supporting double-digit EBITDA growth through 2027. SLB’s discounted valuation compared to historical multiples during upcycles makes it an attractive investment opportunity in the energy sector.
UBS also mentions Coterra Energy and Suncor Energy as favorites in the energy and utilities sectors. These companies offer investors a diverse exposure to the energy landscape and present potential opportunities for growth and returns in the coming months. Coterra and Suncor Energy are well-positioned to capitalize on favorable market conditions and industry trends, making them compelling choices for investors seeking exposure to the energy sector.
UBS’s high-conviction energy picks for the remainder of 2023 reflect a balanced mix of established players and emerging stars in the sector. Through a combination of fundamental analysis and market insights, UBS has identified companies with strong growth potential and competitive advantages in their respective niches. Investors looking to capitalize on the ongoing evolution of the energy landscape may find value in exploring these recommendations and considering them for their investment portfolios.