We recently published a list of 12 High Growth Oil Stocks to Buy. In this article, we are going to take a look at where Diamondback Energy, Inc. (NASDAQ:FANG) stands against other high growth oil stocks to buy.
The oil and gas sector remains a cornerstone of the global economy, driving industries from transportation to manufacturing. Despite the accelerating shift toward renewable energy, oil continues to account for a substantial share of the world’s primary energy supply. According to the International Energy Agency (IEA), global oil demand is projected to increase by approximately 3.2 million barrels per day by 2030 compared to 2023 levels.
Technological Advancements:
Technological advancements have revolutionized oil exploration and production, delivering measurable improvements in efficiency and cost reduction. Innovations in hydraulic fracturing and horizontal drilling have significantly boosted U.S. shale production. The Energy Information Administration (EIA) reported that U.S. crude oil production has reached approximately 13 million barrels per day in recent years. These technologies have made previously unprofitable reserves economically viable, enhancing the industry’s resilience.
US Crude Oil Production:
The U.S. Energy Information Administration (EIA) further projects that U.S. crude oil production will average 13.6 million barrels per day (b/d) in 2026, an increase from the 13.2 million b/d recorded in 2024. This growth is primarily driven by enhanced efficiency in drilling operations and increased output from the Permian Basin, which is expected to account for over 50% of U.S. crude oil production by 2026. In addition to U.S. growth, global liquid fuel production is expected to increase by 1.7 million b/d in 2025, according to EIA. This is driven by both the relaxation of OPEC+ production cuts and further growth from non-OPEC countries such as Canada, Brazil, and Guyana.
Emerging Markets:
Emerging markets are poised to be the primary drivers of future oil demand. India and other emerging Asian economies are anticipated to contribute a combined 500,000 barrels per day to the increase in demand. This surge is largely attributed to the expanding middle classes and the increasing energy needs of developing economies.
Margers and Acquistion:
Concurrently, the oil industry is undergoing significant consolidation. Recent mergers and acquisitions have been valued at $150 billion according to Enverus Intelligence Research, as companies seek to streamline operations, expand reserves, and harness economies of scale.
Our Methodology
To compile a list of the 12 High-Growth Oil Stocks to Buy, we first used the Finviz stock screener to identify oil companies with over 20% revenue growth over the last five years. We then cross-checked the data on Reuters to verify financial health and growth potential before finalizing our selection. Finally we ranked these companies according to their revenue growth over the last five years.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A pipeline worker overseeing the flow of crude oil into storage tanks from an integrated water system.
Diamondback Energy, Inc. (NASDAQ:FANG)
Revenue growth past 5 years: 31.05%
Diamondback Energy, Inc. (NASDAQ:FANG) is an independent oil and natural gas company focused on acquiring, developing, and exploring unconventional reserves in the Permian Basin of West Texas.
In a major acquisition move, Diamondback Energy, Inc. (NASDAQ:FANG) has agreed to purchase certain units of Double Eagle, an EnCap Investments-backed energy producer, in a $4.08 billion cash-and-stock deal. This will add approximately 40,000 net acres in the core of the Midland Basin. Additionally, the company has executed a $1.0 billion drop-down transaction with its subsidiary, Viper Energy, selling certain mineral and royalty interests in exchange for cash and 69.3 million Viper common units.
For Q4, 2024, the company posted 475,900 barrels of oil per day in average production, generating $2.3 billion in operating cash flow, with free cash flow of $1.3 billion. Capital expenditures came in at $933 million, reflecting efficient spending. Diamondback Energy, Inc. (NASDAQ:FANG) increased its annual base dividend by 11% to $4.00 per share, declaring a Q4 dividend of $1.00 per share (2.6% annualized yield). The company also returned $694 million to shareholders through dividends and stock buybacks, representing 51% of adjusted free cash flow.
Overall, FANG ranks 8th on our list of high growth oil stocks to buy. While we acknowledge the potential for FANG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FANG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
