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Actionable news in PE: PARSLEY ENERGY INC,

Williams Capital's Top Picks In Oil & Gas

SM Energy 'A Value Name' In Oil & Gas, Williams Capital Says Buy

Williams Capital analyst Gabriele Sorbara initiated coverage on the E&P sector with 14 stocks' ratings and analyses. Of these 14, eight were initiated with a Buy rating and six with a Hold rating. Top picks in the sector include:

The brokerage believes the sector's fundamentals are solid, and it is not worried about the commodity price at current levels. However, the analyst cautioned and advised investors not to chase select companies.

Williams Capital pointed out four factors for reaching its conclusion on the sector. The first and the foremost is the impact on the wider market correction in the sector. The second is the amount of changes recorded in the last few years, while the third factor is in respect of the ambiguity in macro backdrop. The fourth factor is the record level of EV/EBITDA multiples apart from the stretched RNAV valuations.

Based on these four factors, the brokerage is sitting on the sidelines with hold ratings for a number of quality names. The analyst is waiting for an entry point to these shares, which currently present less than 11 percent upside rewards to the price objectives.

"Nevertheless, we believe companies situated in core resource plays that can demonstrate further capital efficiency improvements with catalysts will continue to garner top valuations and M&A premiums," the analyst said.

Williams Capital's Buy Names

The following stocks are initiated with a Buy rating:

6 At Hold

The following six names were initiated by Williams Capital at Hold:

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DateFirmActionFromTo
Aug 2016Williams Capital GroupInitiates Coverage onBuy
Aug 2016Mitsubishi UFGUpgradesUnderweightNeutral
Aug 2016PiperJaffrayUpgradesNeutralOverweight

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