Fracking Stocks To Buy
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Fracking Stocks To Buy
Hydraulic fracturing, or fracking, has proven to be one of the keys to unlocking a treasure trove of oil and gas trapped in tight rock formations. It has almost single-handedly turned the U.S. into an energy export juggernaut.
While fracking has fueled significant production growth in the country, it hasn't helped boost the stock prices of most energy companies. That's because most focused on growing no matter the cost instead of aiming to create value for their shareholders. That approach, however, has started to change in recent years, as many fracking-focused producers are using the process to generate free cash instead of even more production. That potentially sets these companies up to produce strong returns in the coming year. Three that stand out this January are EOG Resources (EOG 0.76%), Devon Energy (DVN 0.12%), and Diamondback Energy (FANG 0.38%).
EOG Resources is one of the country's fracking leaders. While the company -- like many of its peers -- initially focused on growing its output as fast as it could, it has shifted its aim toward earning premium returns on the wells it drills. As a result, EOG Resources has become one of the lowest-cost producers in the country.
It currently only needs oil to average around $50 a barrel to provide it with enough cash flow to grow its production at a double-digit rate while also supporting its fast-growing dividend. Since crude oil is currently in the $60s, it's on track to produce significant free cash flow in the coming year. EOG plans to use that money to pay off debt as it comes due, allowing it to strengthen its already top-notch balance sheet. The company believes that its strategy will enable it to produce market-smashing returns over the long haul, making it a top fracking stock to buy this month.
These three fracking stocks have all worked hard to enable their operations to thrive at lower oil prices. As a result, they're on course to produce a significant amount of free cash flow in the coming years since crude is currently well above their breakeven levels. That sets these companies up to return a gusher of cash to their investors this year via dividends and share buybacks, which could help them produce market-beating total returns. This upside potential makes them the top fracking stocks to buy this month.
Read on as we look at eight of the best energy stocks to buy now. To compile the list, we turned to the TipRanks database (opens in new tab). Each of the names featured here boasts either a Strong Buy or Moderate Buy rating from Wall Street analysts, and each offers major upside potential based on their consensus price targets.
The Street is also bullish on one of the best energy stocks for 2023, with a unanimous 18 Buys among analysts that have sounded off over the past three months. TipRanks offers up a full analyst rundown of SLB shares (opens in new tab).
EOG is another of the Strong Buy-rated energy stocks featured here, thanks to 18 Buys and just two Holds among analysts who have released notes over the past three months. Check out other analysts' price targets and analysis for EOG at TipRanks. (opens in new tab)
LNG is another one of Wall Street's favorite energy stocks, as evidenced by the consensus Strong Buy rating and $211 price target. This average price target indicates that even after a rally of more than 66% in the past year, Wall Street pros see additional upside of roughly 25% for the shares. See the full rundown of analyst ratings for LNG on TipRanks (opens in new tab).
Shrilekha Pethe has been extensively covering and writing about the U.S. financial markets since 2015. Prior to writing about the world of finance, Shrilekha worked as an equity research analyst for a bulge-bracket client in investment banking, Credit Suisse. Her sole objective is to help investors make better and informed decisions. Her core competency lies in analyzing stocks across different sectors, from technology to mining, and banking to oil