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Talos Energy (TALO) a Must Add to Your Portfolio: Here's Why

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We are upbeat about Talos Energy Inc.’s (TALO - Free Report) prospects and believe it is a promising pick right now.

The company currently carries a Zacks Rank #1 (Strong Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let’s take a look at the other factors that make this upstream energy firm an attractive bet.

Talos is a leading offshore oil and natural gas exploration and production company, with presence in the Gulf of Mexico (United States) and Mexico. Through accretive mergers and success in upstream operations, the energy major has been able to consistently create significant shareholder wealth.  

The company recently signed several accords to acquire acres of oil-rich resources in the U.S. Gulf of Mexico. The to-be-acquired assets have a production capacity of 19 thousand barrel of oil equivalent (MBoE/D). Of the total production volumes, oil contributes 65%. The total proven and probable reserves (2P reserve) from the resources have been estimated by the company at 68 million barrels of oil equivalent (MMBoE). Precisely, the resources that spread across more than 700,000 gross acres have huge prospects that will fetch the company with impressive free cashflow. 

Moreover, the company has a strong balance sheet, with a debt-to-capitalization ratio of 39.98% versus the industry’s 42.77%.

Owing to the positives, Talos witnessed an outstanding 2019. Though the industry has declined 15.8% in the past year hurt by extreme volatility in oil prices, this leading offshore oil and gas producer has rallied 72.7%.

Other Stocks to Consider

Other prospective players in the energy space are Murphy USA Inc (MUSA - Free Report) , California Resources Corporation and CNX Resources Corporation (CNX - Free Report) . While Murphy USA sports a Zacks Rank #1, California Resources and CNX Resources carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA’s earnings beat the Zacks Consensus Estimate in three of the prior four quarters.

California Resources’ earnings beat the Zacks Consensus Estimate in three of the past four quarters.

CNX Resources’ earnings surpassed the Zacks Consensus Estimate in two of the prior four quarters. It has a positive earnings surprise of 34.8%, on average, for the trailing four quarters.

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