Analysts at RBC Capital Markets have revealed two new top stock picks in the oil and gas sector. The bank’s energy and utilities equity team is behind a basket of stock picks called the Global Energy Best Ideas List. RBC said the basket rose 7.8% in July, compared to a 6.2% rise in the iShares S & P Global Energy ETF . Since its inception in February 2013, RBC’s basket of stocks has surged by 145.7% compared to its benchmark ETF, which is up only by 29.5%. For August, RBC analysts added the following stocks to their list of top oil and gas shares: AltaGas The RBC analysts like Canada-listed AltaGas , an energy infrastructure company that carries natural gas to domestic homes and businesses in the United States through its utility subsidiary. The firm also serves global markets through its export terminals in Canada. The investment bank expects its shares to rise 19% to 31 Canadian dollars ($23.18) over the next 12 months from their current price of 26 Canadian dollars. RBC analysts cited the new CEO of AltaGas, Vern Yu, as a positive catalyst for the stock. Yu spent three decades at Enbridge, one of the largest gas utilities in North America, and most recently served as chief financial officer and president of its ‘new energy technologies’ division. “We positively view Vern Yu’s first conference call as the new CEO, which started with messaging on reducing risk and volatility in the business via a higher degree of contracting for both existing cash flow and future growth projects,” the analysts said in a note to clients on August 1. ALA-CA YTD mountain Callon RBC analysts also favor Callon Petroleum . The company focuses on extracting and developing unconventional oil and natural gas reserves in the Permian Basin. The investment bank’s analysts have set a bullish price target of $50 — representing a potential surge of 36% in a year. One of the reasons behind this optimistic outlook, according to the analysts, is the company’s “efficient” financial health and “robust” free cash flow (FCF) generation. The bank’s analysts also pointed out that Callon trades at a discount to its small and mid-cap peers despite having one of the highest FCF yields. “We believe through high-level operational execution, a newly introduced shareholder return program, and continued deleveraging that the stock is set to close the gap and eventually garner a premium,” the analysts added. As well as adding the above two stocks to their Best Ideas List, RBC analysts removed several others this month. Shell PLC and California Resources Corp . were among those no longer listed. CPE 1Y mountain
