Investors that are looking to diversify their portfolio with some ASX energy shares, may want to hear about Bell Potter's top picks for the year ahead.
But first, let's see what the broker is saying about the energy sector in general. It said:
Recent themes in oil markets include macroeconomic sentiment on demand and OPEC+'s apparent lack of cohesiveness with supply. Into 2024, global economic growth remains challenged, despite the expectation of monetary policy easing. Conflict in the Middle East and recent underinvestment by non-OPEC+ producers are key supply risks. We expect market volatility to continue.
For uranium, we have seen increased offtake activity over the past six months, lifting U3O8 prices from US$55/lb to over $81/lb. We anticipate prices to remain elevated in the face of growing demand for nuclear and a lack of near-term supply for U3O8.
Which ASX energy shares are buys?
The first ASX energy share that could be a buy according to Bell Potter is Boss Energy Ltd (ASX: BOE).
The broker has a speculative buy rating and $5.69 price target on the uranium developer's shares. This implies a potential upside of 38% for investors. Its analysts commented:
We anticipate a rising price environment over the next 6-12 months as Nuclear utilities begin contracting for new supply. As BOE is yet to secure an offtake agreement, we see its portfolio of 2.45Mlbs annual production as being exposed to higher prices over the short-medium term.
Another that Bell Potter thinks is a buy for 2024 is Strike Energy Ltd (ASX: STX).
It likes the gas development company due to its positive earnings outlook following the commencement of production. It explains:
Walyering (55% STX, going to 100%) commenced production in October 2023, taking the company to first cash flow. Sequential developments at South Erregulla and West Erregulla should see strong production and earnings growth over the next 2-3 years. Look out for: STX completing the acquisition of Talon Energy (TPD) in mid-December 2023, FID on South Erregulla in early 2024 and Reserves updates.
The broker has a speculative buy rating and 58 cents price target on its shares. This suggests a potential upside of 22% for investors from current levels.
