Wall Street Is in Love With This Oil Stock

This oil stock has lots of adoring fans on Wall Street. That’s evident by the fact that all 36 analysts who cover the Permian Basin oil producer have rated its stock a buy or something equivalent. That makes it just one of two companies in the entire S&P 500 that have earned a unanimous buy rating from the Wall Street analysts who follow the company, according to research by CNBC…

While Diamondback Energy’s (NASDAQ:FANG) growth prospects are the main reason analysts love it, they also see the increasing amount of cash it’s returning to shareholders as an attractive feature.

A high-octane oil growth story

Diamondback Energy has been an oil growth machine since its initial public offering in late 2012. The Permian Basin-focused oil driller has increased its output by a jaw-dropping 785% during that time through a combination of acquisitions and organic drilling. However, what has set Diamondback Energy apart from other growth-focused oil stocks is that it hasn’t been increasing production just so that it can get bigger. Instead, the company has focused on doing deals that are accretive on a per-share basis. That has enabled it to deliver an even bigger surge in earnings, which have zoomed more than 850% on a per-share basis over that time frame despite a 37% slump in oil prices.

Diamondback Energy still has plenty of fuel to continue growing at a rapid rate. Thanks to its prime position in the low-cost Permian Basin, the oil company can generate enough cash flow at $50 oil to drill 290 to 320 new wells this year, which should expand its oil output by another 30%. Meanwhile, with roughly 7,600 high-return drilling locations remaining, the company has the inventory to continue growing production at a high-octane rate for the next several years.

Analysts love this oil growth story. Piper Jaffray, for example, has an overweight rating on Diamondback’s stock because “FANG’s outlook is increasingly differentiated, with leading growth.” Meanwhile, Wells Fargo reiterated its outperform call earlier this year by noting that “Diamondback Energy is positioned to provide both peer-leading growth and cash return to shareholders beginning in 2020.” Others have similarly bullish views on the company thanks to its top-tier growth profile.

Transitioning to a total return story

While Wall Street loves a good growth story, what has taken its affinity for Diamondback Energy up a notch is the…

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