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EOG Resources (EOG) Up 32.8% MTD: What's Behind the Rally?

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Shares of EOG Resources, Inc. (EOG - Free Report) have jumped 32.8% month to date (MTD), compared with the industry’s 26.1% growth. The Zacks Rank #3 (Hold) stock, with a market cap of $26.5 billion, witnessed a rise in Zacks Consensus Estimate for 2020 and 2021 earnings in the past seven days.

Let’s delve into the factors behind the stock’s price appreciation.

What’s Favoring the Stock?

Although the price of West Texas Intermediate (WTI) crude, hovering around $40 per barrel, is significantly below the 2020-beginning price of more than $60 mark, the commodity price has improved considerably in the past few months. The momentum is likely to continue since the market has witnessed the impact of positive vaccine results.

Notably, early data from pivotal studies for experimental shot of Moderna, Inc. (MRNA - Free Report) and the one developed by Pfizer Inc. (PFE - Free Report) and partner BioNTech have yielded promising results. The experimental vaccine of the University of Oxford and AstraZeneca PLC is also promising and is in the final stage of testing.

The positive vaccine data raised hopes that fuel demand will recover to pre-pandemic level once majority of people in the world gets vaccinated. Overall, improving oil prices are definitely a boon for oil explorers and producers and EOG Resources, having strong footprint in prolific shale plays like Permian Basin and Eagle Ford, is well placed to capitalize the favorable pricing scenario.

Moreover, the upstream energy player has a strong balance sheet on which it could rely on to sail through the coronavirus pandemic. Notably, the balance sheet has significantly lower debt levels compared with composite stocks belonging to the industry. Importantly, with cash balance of $3.1 billion and an undrawn credit facility of $2 billion, the company is well positioned to pay its near-term debt maturities.

Stocks to Consider

A better-ranked stock worth considering in the energy space is PDC Energy Inc. , sporting a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

PDC Energy is likely to see earnings growth of 13.3% in 2020.

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