May crude futures (CLK24) have rallied recently, gaining nearly 5% over the second half of March after the International Energy Agency (IEA) raised its forecast for global crude oil demand, and said markets may face a supply deficit this year if OPEC+ holds the line on production cuts. Additionally, Ukrainian drone attacks on Russian refineries and retaliatory attacks on Ukrainian oil facilities, coupled with ongoing diversions in the Red Sea, could further drive oil prices.

Against this backdrop, the broad based S&P 500 Energy Sector SPDR (XLE) closed the first quarter up 13.5% - outperforming even the artificial intelligence (AI)-powered tech sector, as the S&P 500 Tech Sector SPDR (XLK) gained just 8.4%. For investors looking to add exposure to oil and gas names, let's examine three energy stocks that analysts believe have 20% or more upside potential and offer attractive dividend yields.

Energy Stock #1: Halliburton Company

Houston, Texas-based Halliburton Company (HAL) offers a wide range of products and services to the energy industry worldwide. It is the world's second-largest oil services company, and is responsible for most of the world's largest fracking operations. Its market cap currently stands at $35 billion.

Halliburton stock rose nearly 26% over the past 52 weeks, outperforming the XLE’s 16.9% gains over this time frame. The company pays an annualized dividend of $0.65 per share, translating to a yield of 1.65%. Notably, it has paid dividends for 34 consecutive years.

The stock trades at 11.34 times forward earnings and 1.50 times sales, marginally lower than the energy sector median valuations of 11.51x and 1.53x, respectively.

In its most recent fourth-quarter results, announced in late January, Halliburton reported lighter-than-expected revenue of $5.7 billion, though adjusted EPS of $0.86 surpassed estimates. Drilling and Evaluation revenue increased 5% sequentially while operating income rose 11%. Meanwhile, weakness in North American revenue offset gains in the Middle East and Africa. 

On the conference call, Halliburton CEO Jeff Miller said, "The outlook for oilfield services demand remains strong. I expect we will deepen and strengthen our value proposition and generate significant free cash flow." Halliburton generated about $2.3 billion of free cash flow during fiscal year 2023 and retired approximately $300 million of debt. 

Halliburton stock has a consensus “Strong Buy” rating. Out of the 19 analysts offering recommendations for the stock, 16 rate it “Strong Buy,” two have a “Moderate Buy," and one advises a “Hold.”

Halliburton’s average analyst price target is $47.40, indicating a potential upside of 20.2% from current levels.

Energy Stock #2: Noble Corporation

Valued at a market cap of $6.9 billion, Noble Corporation (NE), headquartered in Texas, operates as a global offshore drilling contractor in the oil and gas sector. Through its fleet of mobile offshore drilling units, it offers contract drilling services worldwide. The company operates various drilling rigs, including floaters and jack-ups, catering to the needs of the industry.

Noble Corporation stock is up 21.8% over the past 52 weeks, outperforming the XLE. The company pays a quarterly dividend of $0.40 per share, and yields over 3% at current levels..

The stock currently trades at 11.06 times forward earnings, roughly in line with its sector peers. However, its price-to-sales of 2.65 times is higher than the sector median. 

In its late February report, Noble Corporation reported Q4 revenue that surpassed expectations, reaching $643 million. However, the shares fell after the report, as adjusted net income of $56 million, or $0.39 per share, fell considerably short of estimates.

Looking ahead, Noble Corporation guided for  fiscal 2024 revenue between $2.55 billion and $2.7 billion, while the consensus on Wall Street is looking for $2.71 billion.

Noble Corporation stock has a consensus “Strong Buy” rating. Out of the seven analysts offering recommendations for the stock, six rate it “Strong Buy,” and one advises “Hold.”

The average analyst price target for Noble Corporation is $59.28, indicating a potential upside of 22.2% from current levels.

Energy Stock #3: Schlumberger Limited

Schlumberger Limited (SLB), based in Houston, offers energy industry technology worldwide. It operates in more than 120 countries through four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. SLB offers diverse services, including reservoir characterization, drilling, production, and processing. Its market cap currently stands at $78.2 billion.

Schlumberger stock is up 11.6% over the past 52 weeks. The company pays an annualized dividend of $0.75 per share, which yields 1.37%.

The stock currently trades at 15.51 times forward earnings and 2.36 times sales, representing a premium to some of its oil and gas sector peers.

In its Q4 earnings report, released in mid-January, Schlumberger beat Wall Street’s expectations on both the top and bottom line. Net income rose to $1.11 billion, or $0.77 per share, while revenue jumped 14% to $8.99 billion. On an adjusted basis, EPS of $0.86 edged past the average analyst estimate of $0.84.

Additionally, Schlumberger's foray into AI proved strategic. It enhanced reservoir modeling, optimized drilling operations, and enabled predictive maintenance. For the full fiscal year 2023, its AI platform contributed $2 billion in digital revenue, according to CEO Olivier Le Peuch.

Schlumberger stock has a consensus “Strong Buy” rating. Of the 20 analysts offering recommendations for the stock, 17 rate it “Strong Buy,” and three advise “Moderate Buy.”

The average analyst price target for Schlumberger is $68.91, indicating a potential upside of 25.7% from current levels.