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Top Stock Picks for Week of May 23, 2022

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Delta Air Lines (DAL - Free Report) is one of the four carriers that controls majority of the US aviation market (the carriers account for more than 60% of the domestic market share). Improved air-travel demand, particularly on the domestic front, is aiding Delta. Owing to this tailwind, the carrier provided a bullish outlook for the second quarter. The company expects revenue recovery to accelerate to 93-97% in the second quarter, with unit revenues likely to rise in double digits compared with second-quarter 2019. Strong demand and favorable yields are driving cargo revenues. Delta’s sound liquidity position is an added positive. The optimism surrounding the stock is evident from the Zacks Consensus Estimate for current-year earnings being revised upward in the past 60 days. Coming back to first-quarter 2022 results, Delta’s revenues not only beat the Zacks Consensus Estimate but also soared in excess of 100% from the year-ago figure.

Devon Energy Corporation (DVN - Free Report) is an independent energy company engaged primarily in the exploration, development and production of oil and natural gas. Devon Energy’s first-quarter earnings were better than expected as stable production and recovery in commodity prices boosted performance. WPX Energy acquisition expanded DVN’s presence in Delaware Basin. The company is using new technology in production process to lower operating expenses. The divestiture of the Canadian and Barnett Shale gas assets will allow DVN to focus on the oil-rich U.S. assets. DVN’s stable free cash flow allows it to buy back shares and distribute dividend. Devon has ample liquidity to meet near-term debt obligations. In the past year, DVN’s shares have outperformed the industry. The company’s diversified portfolio and focus on high-margin assets hold significant long-term growth potential.

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