Oil stock Permian Resources is Thursday's IBD 50 Stocks To Watch pick after shares broke out of a base following the energy company's earnings report.
Permian Resources acquires and develops oil and natural gas assets in the Permian Basin. The prime property is located in western Texas and New Mexico and is the highest producing oil field in the U.S. Permian Resources owns 400,000 net acres and 68,000 net royalty acres.
Oil Stock Breaks Out And Hits A High
The oil stock broke out of a third-stage cup base on Wednesday, reaching the 15.49 buy point. Shares hit a 52-week high before retracing and closing just above the buy point. The 5% buy zone goes up to 16.26. The stock is hovering around the buy point Thursday morning.
Permian reported better-than-expected fourth-quarter earnings and sales late Tuesday, prompting Wednesday's jump.
The base formed after a failed cup-base breakout around mid-October. The stock sold off as the price of oil fell and Permian's third-quarter earnings sorely missed estimates Nov. 7. Permian stock retook its 50-day moving average on Feb. 8, as it built the side of the cup.
Earnings Flat But Improving
Permian's fourth-quarter earnings were flat year over yeear, but improved from two prior declining quarters. Its quarterly sales growth accelerated from 32% to 38% and 47%, which is a positive sign.
Permian rolled out a new strategy with its quarterly results.
"We are excited to announce our 2024 operational and financial plan, which combines consistent year-over-year well productivity with lower costs and other optimized key inputs to deliver even better capital efficiency than we realized in 2023," said James Walter, co-CEO.
"Most importantly, our 2024 plan allows us to maximize shareholder value by delivering industry leading per share annual growth across production, cash flow and free cash flow," Walter added.
Investors should note, the oil stock's IBD Earnings Per Share Rating is a dismal 24 out of 99, when investors should look for an 80 or higher. And it's Composite Rating is a mediocre 76.
But its Accumulation/Distribution Rating of A- indicates institutions have been adding the oil stock in fairly heavy levels over the last 13 weeks. Likewise, mutual funds have been adding the stock, with 591 owing shares in December up from 541 in September and 438 in June.
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