We recently compiled a list of the 12 Best S&P 500 Stocks to Invest in According to Analysts. In this article, we are going to take a look at where Devon Energy Corporation (NYSE:DVN) stands against the other S&P 500 stocks.
2024 was a memorable year for the broad market index, which posted a gain of 23.31%, building on the 24.2% return in 2023. The two-year surge of over 53% is the best performance for the index since the 66% rally between 1997 and 1998.
READ ALSO: 15 Stocks ChatGPT Predicts Could Make You Wealthy in 10 Years and 10 Under-the-Radar Stocks with Massive Upside for 2025.
The stock market benefited from a resilient economy that avoided recession, declining interest rates, and waning inflation. Analysts are projecting continued growth in 2025 amid strong economic data and optimism about a business-friendly Trump administration returning to power.
The broader market rose 0.5% on January 23, going past its peak in December to a new record high. The gain added to the week-long winning momentum after data showed inflation slowing in the country more than economists had anticipated. With this rise, the index is up 4% since the start of the year.
Investor sentiment has also been bolstered with President Trump reiterating his commitment to lowering oil prices and further cutting interest rates. The 78-year-old is also taking his time over tariffs by holding them off until February. Analysts believe a less aggressive approach than some had expected has helped the market move higher. Here is what Larry Tentarelli, chief technical strategist at the Blue Chip Daily Trend Report, had to say:
“He really can’t control interest rates, but the market likes to hear that kind of stuff. So far, the market does seem to like what Trump’s policies are going to be, so we’ll just have to see if there’s some follow-through.”
A string of strong corporate earnings reports has also supported the gains in January. According to data from FactSet, earnings for companies listed on the index are on track to grow by over 12% for the fourth quarter compared to the same period in the prior year. If that happens, this would mark the best quarter for company profits since 2021.
While the overall outlook for the stock market looks encouraging, analysts are also cautious about the rally having gone too far, and a correction is in the offing this year. The threat of fierce trade wars sparked by tariffs, ongoing geopolitical conflicts, and broader inflationary pressures could also hurt the market.
Jurrien Timmer, Director of Global Macro for Fidelity Management & Research Company wrote the following in a note on December 18.
“Personally, I am bullish on stocks for 2025, though with valuations high and the bull market maturing, I don’t think investors should expect quite such spectacular returns next year as we have seen this past year. And I think there are important risks from inflation, and the market’s concentration, to be aware of.”
Methodology
For this article, we went through the list of large cap stocks on the broader market index and picked the top 12 with the highest average share price upside potential. All data is as of the close of the day on Friday, January 31, 2025. The stocks are listed in ascending order of their share price upside potential.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A group of technicians in hazmat suits inspecting a natural gas storage tank.
Devon Energy Corporation (NYSE:DVN)
Average Share Price Upside Potential as of January 31: 47.24%
Market Cap: $22.40 billion
Devon Energy Corporation (NYSE:DVN) is a leading oil and gas company with a multi-basin portfolio. It is a key player in America’s energy sector, specializing in the exploration, development, and production of oil, natural gas, and NGLs.
On September 27, Devon Energy Corporation (NYSE:DVN) announced the completion of its $5 billion strategic acquisition of Grayson Mill Energy. The move has significantly enhanced Devon’s footprint in the Williston Basin, adding 307,000 net acres, 300 top-quality refrac candidates, and 500 undrilled gross locations. The acquired property is also likely to boost production by 100,000 barrels of oil equivalent per day next year.
During its recent Q3 2024 earnings call on November 6, Devon Energy Corporation (NYSE:DVN) announced $683 million of core earnings, or $1.10 per share. It also reached an all-time quarterly record of an average of 728,000 barrels of oil equivalent production per day. This included 335,000 barrels of oil production per day, which surpassed the guidance by 4%.
The company generated $1.7 billion of operating cash flow during the quarter, again exceeding expectations, and increasing 8% year-over-year. It also generated $786 million of free cash flow, a significant improvement from last year. Devon Energy Corporation (NYSE:DVN) is also committed to shareholder returns; during the quarter, it repurchased $295 million of common stock and declared a quarterly cash dividend of $0.22 per share.
Analysts expect Devon Energy Corporation (NYSE:DVN) to sustain its portfolio, further build on its financial strength, and deliver value to shareholders. They have a consensus Buy rating for the stock, with an average share price upside potential of 47.24%, making it one of the best large-cap stocks to invest in according to analysts.
Overall DVN ranks 11th on our list of the best S&P 500 stocks to invest in according to analysts. While we acknowledge the potential of DVN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DVN 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.
