Bank of America/Merrill Lynch has joined the recent chorus of analyst chatter on oil stocks, issuing a 124-page report today where Chevron, the second-largest U.S. oil company, was named the group's top pick. Noting that stock selection in the sector is key going forward, BofA/Merrill gave Chevron (CVX) a ''buy'' rating with a $95 price target. That's more than $18 above where the stock closed on Friday.
Other oil names getting a ''buy'' rating in the report include Occidental Petroleum (OXY) with a price target of $105, Anadarko Petroleum (APC) with a $82 price target, Apache (APA) with a $128 price target, and Hess (HES) with a $75 price target.
Occidental could net a big payoff from a recent California discovery and Hess was deemed a ''recovery play for 2010.''
The report gave ''neutral'' ratings to Exxon Mobil (XOM), the largest U.S. oil company, Marathon Oil (MRO) and natural gas giant Devon Energy (DVN).
ConocoPhillips (COP), the third-largest U.S. oil producer, received a ''sell'' rating because Merrill said the company is overexposed to the two weakest parts of the energy business: Refining and North American natural gas.