EOG Resources, Inc. (EOG - Free Report) stock appears to be a solid bet now, based on strong fundamentals and compelling business prospects.
Headquartered in Houston, TX, EOG Resources is primarily involved in exploring and producing oil and natural gas. This leading upstream energy player’s operations are located in the United States and abroad. It employs technologies like horizontal drilling and advanced completion techniques to maximize production from wells. The company’s shares have popped 2.5% over the past three months.
EOG Resources currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A, offering significant investment opportunities to investors. Here V stands for Value, G for Growth and M for Momentum. The company’s score is a weighted combination of these three scores. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold), make solid investment choices.
Let's see what makes the stock an attractive investment option at the moment.
Factors Favoring EOG Resources
This upstream energy player has an attractive growth profile, huge inventory of drilling opportunities, upper quartile returns and a disciplined management team. The company has significant acreages in oil shale plays like Permian, Bakken and Eagle Ford. Most importantly, EOG Resources is among the leading players in the Bakken play and the largest in the Eagle Ford. The upstream player’s extensive reach to these key shale resources will likely support long-term production growth.
In the promising shale plays, EOG Resources has identified 9,500 undrilled premium wells that could provide access to 9.2 billion barrels of oil equivalent estimated potential reserves. In the Eagle Ford alone, the company has identified 2,300 undrilled premium locations with significant oil equivalent barrels of estimated potential reserves.
Even though EOG Resources has curtailed production due to low oil prices, stemming from coronavirus-induced lockdowns and exhausted storages, it has brought back a significant portion of the output following the oil price recovery.
The company’s balance sheet is significantly less levered than the composite stocks belonging to the industry. In fact, its debt-to-capitalization ratio has consistently been lower than the industry over the past five years. Notably, the company’s cash balance of $2,906.9 million is more than sufficient to pay the current debt of $841 million.
Positive Growth Projections: It recorded an earnings growth rate of 10.3% in the past five years, outperforming the industry’s 1.2% growth. This momentum is likely to continue, as indicated by EOG Resources’ projected earnings per share growth of 9.4% for the next five years.
Other Stocks to Consider
Other top-ranked players in the energy space include ConocoPhillips (COP - Free Report) , Antero Resources Corporation (AR - Free Report) and Centennial Resource Development, Inc. (CDEV - Free Report) , each holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ConocoPhillips’ second-quarter earnings estimates have improved over the past 60 days, with four upward estimate revisions and one downward movement.
Antero Resources’ bottom line for second-quarter 2020 is expected to rise 33.3% year over year.
Centennial Resource’s second-quarter earnings estimates have improved over the past 30 days, with three upward estimate revisions and no downward movement.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>