We are upbeat about Antero Resources Corporation’s AR prospects and believe it is a promising pick right now.
The company currently sports a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities for investors.
Let’s delve deeper to analyze the factors that make this upstream energy player an attractive investment option.
Strong Appalachian Foothold
Antero Resources has strong foothold in the prolific Appalachian Basin, with a huge reserve of natural gas. The basin comprises Marcellus and Utica shale plays where the company has presence across 612,000 net acres. In those regions, the company reported 2018-end proved reserves at 18.0 trillion cubic feet equivalent (Tcfe) of natural gas, up 4% year over year.
Overall, growing proved reserves are likely to help the company to meet its target of compound annual production growth rate of 10% through 2023 from 2019. Thus, with its vast natural gas reserve base, the company is positioned to capitalize on the mounting clean energy demand.
Most importantly, Antero Resources expects production volumes to grow 16% to 20% through 2019 despite its plan to lower capital spending for drilling and completion activities by more than 20%. This reflects that the company’s operations are getting more efficient. Against this backdrop, the company is expected to witness an annualized growth in earnings by 20% over the next five years, beating the industry’s 19.1% growth.
Although Antero Resources is not paying dividend, the company returns cash to shareholders through stock buybacks. Notably, in the December quarter of 2018, the company repurchased 9.1 million shares.
Other Stocks to Consider
Other prospective players in the energy space are NGL Energy Partners LP NGL, Jones Energy Inc. JONE and SemGroup Corporation SEMG. While NGL Energy sports a Zacks Rank #1 (Strong Buy), Jones Energy and SemGroup carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NGL Energy is likely to see earnings growth of more than 200% in the current year.
Jones Energy expects 2019 earnings growth of 19% year over year.
SemGroup delivered average positive surprise of 85.4% for the preceding four quarters.
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