3 Reasons to Buy Devon Energy Stock Like There's No Tomorrow

With an almost 28% decline in 2024, Devon Energy (NYSE: DVN) is a stock that fell out of favor with the market. The sell-off has arguably been overdone, as the price of oil spent much of last year trading with a $70 per barrel handle and trades at almost $75 per barrel at the time of this writing. Meanwhile, Devon Energy strengthened its business through 2024, and the stock is now looking like a great value. Here are three reasons why.Devon's $5 billion deal to acquire Grayson Mill Energy raised some eyebrows. It's fair to say the stock has trended downward since its announcement in early July. It's challenging to know precisely why the market is concerned. Still, one possible reason is the acquisition of significant assets in the Williston Basin (Bakken) in North Dakota. In recent years, the more highly valued Permian region assets (where Devon's core Delaware Basin assets are) have grown oil output more successfully than the Bakken region. In addition, the market may be worried because Devon was using $80 per barrel to base the deal on.But here's the thing: Based on its post-deal projections, Devon Energy is still an outstanding value. With the Grayson Mill deal now closed, management's preliminary 2025 outlook put it at a free-cash-flow (FCF) yield of 9% at a price of oil of $70 per barrel, 14% at $80 a barrel, and 5% at $60 a barrel, based on the then stock price of about $38.30.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool