U.S. energy producer Devon Energy is Wednesday's IBD Stock Of The Day. Devon Energy stock is flashing a buy signal after breaking a recent downtrend.
Oklahoma City-based Devon Energy is a leading onshore U.S. oil and gas producer. It operates in multiple basins across the country, including the resource-rich Delaware Basin in West Texas and the Barnett Shale, one of the largest onshore natural gas fields in the U.S.
U.S. crude oil futures made gains Wednesday, rebounding nearly 3% to almost $90 per barrel. Crude oil prices have been on a downward trend since early June.
Meanwhile, natural gas futures surged around 6% Wednesday to $8.8 per million British thermal units. U.S. natural gas prices are moving back toward the 14-year high of $10 per million British thermal units they hit in August, as demand surges in Europe.
In four of the last five quarters, Devon has produced triple-digit revenue growth. Over the last three years, the company has generated annual average sales growth of 26%.
Devon Energy earnings surged 331% to $2.59 per share as revenue grew 133% to $5.6 billion in the second quarter. DVN's Q2 revenue from oil contracts was $2.9 billion, while sales from gas and natural gas liquids totaled $1.1 billion.
Analysts predict earnings to grow 111% in Q3 to $2.28 per share, according to FactSet. Wall Street forecasts sales increasing 23% to $4.3 billion.
Devon Energy has earned spots on the IBD 50 and IBD Big Cap 20. DVN joined IBD Leaderboard on Monday and SwingTrader on Wednesday.
Devon Energy Stock
DVN shares were up 4.5% to 72.17 during Wednesday's market trading. Devon Energy stock is offering investors an early entry above Monday's high of 71.57. DVN shares have formed a cup with handle with an official 75.37 buy point, according to MarketSmith analysis. The buy range extends to 79.14.
While DVN stock rebounded from its 21-day line, where it's found support in recent sessions, it's extended from its 50-day moving average.
After a sharp run-up since the Covid pandemic, DVN stock dropped off after hitting a new high of 79.40 in early June. It then dropped below its 10-week and 40-week moving averages before finding support.
With DVN already making a big run, future breakouts entail much greater risk, according to IBD Leaderboard analysis. However, the current base shows positive elements. Mutual fund ownership has also increased substantially, from 880 funds at the end of 2020 to 2,039 as of the end of Q2 this year.
DVN ranks 15th in Oil & Gas-U.S. Exploration and Production industry group. DVN has a Composite Rating of 99. It has a 97 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement with a 1 to 99 score. The rating shows how a stock's performance over the last 52 weeks holds up against all the other stocks in IBD's database. The stock has an EPS Rating of 82.
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