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Here's Why Laredo (LPI) is an Attractive Investment Bet Now

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Laredo Petroleum, Inc.’s stock price has jumped 49.4% year to date compared with the Zacks Oil and Gas - Exploration and Production - United States industry’s rise of 43.9%. Moreover, this publicly-traded exploration and production company has witnessed upward earnings estimate revisions for 2021 and 2022 in the past 30 days.

The company currently carries a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

 

 

Factors Favoring the Stock

The West Texas Intermediate crude price, which is currently hovering around $60 per barrel, has significantly improved from its slump into negative territory in April 2020. As vaccination rollout led to an increase in fuel demand on a global scale, a strong economic recovery is expected within this year.

The rally in oil price has also been supported by OPEC+ (OPEC and its non-OPEC partners) since the cartel and its allies have extended production cut till April. Per the agreement reached on Mar 4, following a meeting through video-conferencing between OPEC led by Saudi Arabia and Russia-led non-OPEC producers, the majority of OPEC+ members decided to keep the output unchanged.

Rising oil prices are undoubtedly a boon for the company’s upstream operations. Hence, Laredo Petroleum, engaged in operating unconventional resources in the prolific oil and natural gas producing regions like Permian Basin, has the ability toexploit additional upside potential and utilize the improving commodity price scenario.

Further, the company has done a commendable job of enhancing its unit metrics. Last year, Laredo Petroleum managed to reduce drilling and completion costs by 21%, while increasing drilling efficiencies by 4%.

The company’s emission-reduction targets, such as reduction in GHG intensity by 20%, methane emissions to less than 0.20% of natural gas production, and the elimination of routine flaring by 2025 are also noteworthy.

Thus, Laredo, one of the leading producers in the Permian Basin, is poised for further upside in the coming days.

Other Stocks to Consider

Some other top-ranked players in the same space are Exxon Mobil Corporation (XOM - Free Report) , Magnolia Oil & Gas Corporation (MGY - Free Report) and Suncor Energy Inc. (SU - Free Report) , currently sporting a Zacks Rank #1.

Exxon’s earnings for 2021 are expected to rise 19.5% year over year.

Magnolia’s earnings for 2021 are expected to grow 23% year over year.

Suncor’s earnings for 2021 are expected to surge 230% year over year.

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