South-of-the-border energy stock Vista Energy has entered a late-stage base and made it onto the elite IBD 50 list. The shale and oil exploration and production leader is Tuesday's IBD 50 Stocks To Watch pick.
Mexico-based Vista Energy has nearly 900 shale locations under development within 183,000 acres in Vaca Muerta, Argentina's and the world's second-largest shale deposit. It also has a working interest in the Macuspana Basin.
VIST stock listed as a special-purpose acquisition (SPAC) in Mexico in 2017 and came public on the NYSE in July 2019.
It holds the top spot out of 16 stocks in the Oil & Gas International Exploration & Production industry group, which dropped to 84th out of the 197 groups IBD tracks, from 39th four weeks ago.
The energy stock has added just 1% so far in 2023, falling out of favor in a shift toward growth stocks. Choppy oil prices and economic uncertainty added to the group's decline.
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Energy Stock Forms Base Near New Highs
The energy stock is forming a late-stage ascending-base pattern with a 17.16 buy point, as seen on the MarketSmith chart. VIST broke above its 10-week moving average in September, finding support. The base started by hitting its 52-week high of 17.06 on Jan. 18, but closing down 7.7% on the day.
Shares rose above the 21-day exponential moving average Tuesday, as crude oil futures had a strong day. The energy stock is 6% off its buy point but near a 52-week high.
VIST holds a robust 98 Relative Strength Rating, outperforming 98% of stocks in the IBD database.
Strong Energy Stock Growth
Sales growth rose in the high double digits in the last three quarters.
Third-quarter sales grew 91% over the prior year's quarter, driven by a 35% increase in oil production. The company beat analysts' Q3 expectations on both EPS and sales on Oct. 26. The company booked strong Q3 cost savings, offsetting the strong Argentina peso. Quarterly EPS has been erratic but strengthening in the last two quarters.
Analysts expect 2022 annual earnings per share of $3.05, up considerably from 54 cents in 2021, and rising to $3.61 in 2023. Vista reports Q4 earnings on Feb. 23.
The company started a share repurchase program in December, buying back up to $25.63 million of shares.
Vista earns an SMR Rating of A. The IBD proprietary rating combines three gauges: sales growth, profit margin and return on equity (ROE). The rating goes from A to E, with A being best.
Focused On ESG And Sustainability
Oil and gas producers have been feeling the heat to shift toward cleaner and renewable energy.
Vista reduced greenhouse gas intensity by 30% in 2021. It plans to reduce GHG emissions by 75% in the next five years and become net zero on emissions by 2026.
The company committed to a 2022 program to remove carbon dioxide from the atmosphere and implement forest and soil carbon removal projects.
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