These 2 EU oil stocks are BofA’s top picks in the sector

Bank of America issued a report highlighting two stocks as its top picks within the European oil sector, focusing on companies exhibiting strong cash flow generation and resilience against potential mid-cycle commodity price pressures. The bank's preferred pick remains TotalEnergies, which is seen as the most undervalued among its peers, boasting a debt-adjusted free cash flow yield of over 10%.

TotalEnergies' organic volume growth and free cash flow generation are projected to outperform, ensuring its ability to withstand potential mid-cycle commodity price drops by 2028. Bank of America also recommended Saipem as the leading stock in the European oil field services segment, as oil services companies appear to be better insulated from potential commodity price weakness due to an expected upcycle in offshore oil and gas capital expenditures.