In January, Jefferies Financial completed its spinoff of Vitesse Energy, a 2023 IPO that has already emerged as one of the top dividend stocks to watch. As a nonoperator in oil and gas wells, Vitesse has fueled a dividend yielding 8.2% on an annualized basis, as well as a spot on the IBD Breakout Stocks Index.
From the close of its first week of trading, VTS stock gained as much as 79% before pulling back in June to form its current base. With earnings due Nov. 1, the bumpy new consolidation presents multiple potential entries, depending on how aggressive investors choose to be.
While its strong relative strength line shows market leadership, investors should keep in mind certain risks.
The market indexes remain in a correction, which can make it hard for any stock to launch a sustained breakout. Plus, it's risky to buy any stock just before it reports. You can reduce risk by waiting to see how Vitesse reports and how Wall Street reacts before investing.
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Vitesse Cash Flow Fuels Spot Among Best Dividend Stocks
Sales and earnings for Vitesse Energy have ranged from superb to sporadic in recent quarters.
Top-line growth continues to slow from the strong triple-digit gains it generated on occasion in 2021 and 2022. In the second quarter of this year, the Colorado-based company generated sales of $51.6 million, a 35% slowdown compared to the prior-year quarter.
Bottom-line growth has flashed an emerging turnaround. Albeit based on the prior-year quarter that showed a loss, Vitesse posted 183% growth to 35 cents a share in the second quarter. For Q3, Wall Street forecasts earnings of 43 cents a share.
For the full year, analysts expect a 66% slowdown to $1.56 a share. But in 2024, the outlook calls for a 79% spike to earnings of $2.80 per share.
Throughout these fluctuations, the company continues to rank as one of the top dividend stocks focused on returning capital to stockholders through owning financial interests in oil and gas wells. That focus puts a spotlight on operating cash flow, which stands at a strong $6.58 per share.
VTS Stock: Choose Your Buy Point — Carefully
Keeping in mind the notes of caution mentioned earlier, VTS stock offers a mix of potential interpretations of bases and buy points.
One is a conventional 27.39 buy point in a undefined consolidation. Some investors might also see a double bottom, a common pattern in choppy markets. In a double bottom, the second leg down must undercut the first leg down. VTS stock did slightly undercut the 20.97 low of the first leg down.
More aggressive investors could also use trendlines to identify earlier entries.
When it comes to interpreting stock charts, the key is to focus on points of support and resistance. After establishing a floor of support, a stock creates a new entry by forming a ceiling of resistance.
So whether from a base or a trendline, look for a stock to prove its strength by breaking through resistance in strong volume.
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Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
