This company explores for, develops, produces and markets crude oil and natural gas. Stifel recently raised its target price to $120, noting that high margins, volume growth and free cash flow should push the stock higher.
EOG Resources (EOG)
from Dow Theory Forecasts
With an Overall score of 98, EOG Resources (EOG) is the highest-rated large-cap in the exploration-and production industry. It scores above 80 for five of six Quadrix categories. Even the exception, Value, is a respectable 66. The stock’s forward P/E ratio of 21 falls in line with the industry median and reflects projected 18% profit growth in 2014. EOG is being initiated as a Long-Term Buy.
The strong Quadrix scores reflect EOG’s impressive track record and outstanding operating momentum. With operations in most of the key energy deposits in North America, EOG grew total production 9% last year. About 95% of EOG’s reserves and 88% of production are located in the U.S. and Canada. Capital spending has begun to stabilize, allowing EOG to generate $70 million in free cash flow in 2013—its first year of positive free cash flow since 2005.
Sales and cash from operations have grown at annualized rates of at least 35% over the past three years. Note that EOG underwent a 2-for-1 stock split on April 1.
Richard J. Moroney, CFA, Dow Theory Forecasts, www.dowtheory.com, 800-233-5922, April 7, 2014