10 Best Performing Energy Stocks in 2024

03. LandBridge Company LLC (NYSE:LB)

Year to date Share Price Gain: 93.37%

Number of Hedge Fund Holders: 15

LandBridge Company LLC (NYSE:LB) has established a unique position in the energy sector, coupled with a diversified infrastructure development strategy that sets it apart from traditional oil and gas firms. With a remarkable year-to-date share price gain of 93.37% in 2024, the company has emerged as one of the best-performing energy stocks. Operating in the resource-rich Delaware Basin, which spans Texas and New Mexico, LandBridge focuses on two key infrastructure areas: water processing and data centers. This diversification allows LandBridge Company LLC (NYSE:LB) to capitalize on both its land assets and the growing demand for critical infrastructure.

A critical aspect of LandBridge Company LLC (NYSE:LB) business model is its innovative approach to water processing. The Permian Basin, where LandBridge holds around 220,000 acres, produces a significant amount of water alongside oil. Texas allows for re-injection of this water, whereas New Mexico enforces stricter regulations, making water processing a critical issue. LandBridge is strategically positioned along the state border, giving it the advantage of exploiting regulatory differences. The company currently processes and transports 1.8 million barrels of water daily through its partnership with WaterBridge. This creates a significant free cash flow opportunity, with potential annual revenues projected at $200-300 million as the demand for water processing grows.

In addition to water management, LandBridge Company LLC (NYSE:LB) is venturing into digital infrastructure, planning to build data centers in the Permian Basin. The region’s abundant, low-cost energy and water resources make it an ideal location for large-scale data centers. LandBridge aims to develop six data centers, each generating an estimated $30-40 million annually. These data centers will be powered by a gigawatt power plant and a 250-megawatt solar farm, highlighting the company’s commitment to integrating renewable energy into its business model.

LandBridge Company LLC (NYSE:LB) diversified revenue streams make it an attractive investment. In addition to water royalties and data centers, the company generates income from oil, gas, and other infrastructure projects. With projections of up to $300 million from water processing and $40 million per data center, the company’s revenue potential is substantial. Despite its current market cap of $2.43 billion, analysts believe that LandBridge could reach a valuation of $10 billion, driven by its solid growth prospects and minimal debt load.