Diamondback Energy is the IBD Stock Of The Day for Tuesday. FANG stock is nearing a buy point in a base begun in April, just as oil prices rebound heading into a bustling July Fourth holiday.
Oil and natural gas producer Diamondback Energy primarily operates in the Permian Basin, the U.S.' largest oil basin, which is located in Southwest Texas.
Shares have trended higher since mid-June as oil prices recovered, lifted by rising summer fuel demand, concerns for an extended conflict in the Middle East, and a busy hurricane season in the Gulf of Mexico. West Texas intermediate oil prices on Tuesday morning rose above $84 per barrel for the first time since April.
Meanwhile, Americans are gearing up for a travel-heavy Fourth of July holiday vacation. AAA on June 20 projected a record 70.9 million Americans will travel 50 miles or more to celebrate the Independence Day holiday week, which stretches from June 29 to July 7. The travel forecast for 2024 represents a 5% increase from last year and an 8% bump from 2019 levels.
About 60.6 million people this year are expected to venture to their destinations by car, compared with 57.8 million in 2023. The number of air travelers is expected to increase nearly 7% from last year to 5.74 million — also another record.
Elsewhere, Diamondback on April 30 posted better-than-expected earnings and revenue for Q1. The company's earnings per share increased 9% after EPS declines lessened through the three prior quarters. Revenue growth accelerated for the second quarter in a row with a 16% jump. However, Diamondback's production forecast lagged analyst estimates.
The company on Feb. 12 agreed to swap 117.3 million FANG shares and $8 billion cash for privately held rival Endeavor Energy.
Diamondback Energy ranks second in IBD's Oil & Gas-U.S. Exploration & Production industry group, according to IBD Stock Checkup. Viper Energy — a limited partnership controlled by Diamondback — leads the group.
FANG Stock
FANG stock is within 3% of a 211.96 buy point for a 12-week cup base. Shares rose to test their 50-day moving average at the end of June, and have trended higher over the past four trading days. Volume has been positive in each of the two weeks of the stock's climb from the consolidation lows.
Aggressive investors could have found an early entry opportunity on June 24 as FANG shares broke a trendline. Still, the current pattern is a second-stage base, meaning that Diamondback Energy should have more room to run.
Diamondback Energy has a 94 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. FANG has an 86 EPS Rating. The stock's relative strength line is trending toward its late-April highs, giving the stock a 91 RS Rating.
Diamondback Energy has climbed 34.2% so far this year.
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