8 Most Promising Stocks to Buy According to Wall Street Analysts

6. Kosmos Energy Ltd. (NYSE:KOS)

Analyst Upside Potential: 70.45%

Number of Hedge Funds: 25

Kosmos Energy (NYSE:KOS) is a deepwater, full-cycle, independent oil and gas exploration and production company focused on the offshore Atlantic Margins. Its primary assets encompass production offshore Equatorial Guinea, Ghana, and the United States Gulf of Mexico, along with gas projects offshore Senegal and Mauritania. The company operates in four geographical reporting segments: Equatorial Guinea, Ghana, the US Gulf of Mexico, and Senegal/Mauritania.

Kosmos Energy (NYSE:KOS) is seeing strong operational momentum and solid progress across all its business units. It announced a target to grow production by around 50% two years ago, primarily driven by the delivery of three significant projects; Winterfell in the Gulf of Mexico, Junilee Southeast in Ghana, and GTA in Senegal and Mauritania. It is on the path to achieving this target by successfully starting the Winterfell and Jubilee Southeast along with production enhancement projects in the Gulf of Mexico.

It expects the startup of the final phase of the GTA project through the end of 2024. It also expects the infill drilling campaign in Equatorial Guinea to contribute towards its year-end production goal of around 90,000 barrels of oil equivalent per day. However, this production growth is not merely for growth’s sake, as it is coming from high-quality material projects with long reserve lives across both oil and gas. This rising production is working on a multiyear investment cycle.

The increased production and lower capital are expected to drive a meaningful cash flow inflection for the business, with a free cash flow of around $100 million to $150 million per quarter once it is up and running. The company will use this cash flow to initially pay down debt and strengthen its financial resilience. It is also planning to invest in future growth selectively, prioritizing high-graded projects that fit within its targeted capital budget.

Once its debt level reaches its near-term leverage target of sub 1.5 times, Kosmos Energy (NYSE:KOS) will focus on shareholder returns and further debt paydown to achieve its long-term goals. The company ranks sixth on our list of the top most promising stocks to buy among Wall Street analysts.