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Here's Why it is Worth Investing in Denbury Resources Now

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On Jan 9, Denbury Resources Inc. was raised to a Zacks Rank #1 (Strong Buy).  

Why the Upgrade?

Earnings estimate revisions are at the core of the Zacks investment philosophy. Stocks that have recently seen an upward revision in estimates tend to outperform the market over the next nine to 12 months.

Over the last 60 days, the Zacks Consensus Estimate for 2017 earnings has been revised higher from 5 cents to 9 cents. Moreover, for 2018, estimates were raised from 12 cents to 26 cents.

Denbury has an impressive earnings surprise history. The upstream player managed to surpass the Zacks Consensus Estimate in two of the prior four quarters, the average positive surprise being 125%. Also, we expect the company to witness year-over-year earnings improvement of 125% in 2017 and 189.8% in 2018.  

The business scenario looks profitable as West Texas Intermediate (WTI) oil recently traded at $64.77 per barrel — last touched before Dec 8, 2014 — per CNBC. Also, natural gas crossed the psychological mark of $3 per million British Thermal Unit (BTU). Overall, the favorable commodity pricing scenario could fetch the exploration and production company attractive cashflow.

We also appreciate the company’s constant efforts to reduce operating expenses amid the volatile business scenario. In the nine-month ended Sep 30, 2017, Denbury’s total expenses declined almost 54%. The company’s pricing chart looks impressive. Over the past six months, the stock has rallied 51.6%, outperforming the industry’s 17.6% gain.

 

 

Other Stocks to Consider

A few other prospective stocks in the energy sector are Chevron Corporation (CVX - Free Report) , ConocoPhillips (COP - Free Report) and Cabot Oil & Gas Corporation . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.    

San Ramon, CA-based Chevron is a leading integrated energy player. The company is expected to post year-over-year earnings growth of 335% in 2017.

Headquartered in Houston, TX, ConocoPhillips is an upstream energy player. The company’s 2017 earnings are estimated to grow 121.4%.

Headquartered in Houston, TX, Cabot is involved in the exploration of oil and gas. The stock will likely report earnings growth of 357.1% in 2017.

Zacks Editor-in-Chief Goes ""All In"" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

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