In this article, we discuss 5 hot oil stocks to buy now. If you want to see more stocks in this selection, check out 10 Hot Oil Stocks To Buy Now.
5. Devon Energy Corporation (NYSE:DVN)
Average 3-month Volume as of January 31: 9.39 Million
YTD Share Price Gains as of January 31: 7.26%
Number of Hedge Fund Holders: 51
Devon Energy Corporation (NYSE:DVN) is an independent energy company, primarily engaged in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. On January 24, Wells Fargo analyst Roger Read initiated coverage of Devon Energy Corporation (NYSE:DVN) with an Equal Weight rating and a $70 price target. In a research note to investors, the analyst mentioned that Devon Energy Corporation (NYSE:DVN)’s recent acquisitions and resource base support its aim of up to 5% yearly production growth. However, the neutral rating reflects the market’s perception of the stock’s recent performance. Wells Fargo would also prefer if more of Devon Energy Corporation (NYSE:DVN)’s free cash flow was directed towards its share repurchase program to enhance per share metrics over time. It is one of the hot oil stocks to monitor.
According to Insider Monkey’s data, Devon Energy Corporation (NYSE:DVN) was part of 51 hedge fund portfolios at the end of September 2022, compared to 57 in the earlier quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 10.6 million shares worth $642 million.
In its Q2 2022 investor letter, GoodHeaven Capital Management, an asset management firm, highlighted a few stocks and Devon Energy Corporation (NYSE:DVN) was one of them. Here is what the fund said:
“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long-time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high-return, growing, reasonably predictable and moderately levered companies led us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is most variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”
