Here's Why Hold Strategy is Apt for Matador (MTDR) Stock Now
Matador Resources Company MTDR is a leading upstream player, having a strong foothold in prolific oil and natural gas shale and other unconventional plays. The company is likely to see earnings growth in 2024 and 2025, respectively.
What’s Favoring the Stock?
The price of West Texas Intermediate crude, trading at more than $75 per barrel, is highly favorable for exploration and production activities. Handsome crude price is likely to aid MTDR, carrying a Zacks Rank #3 (Hold), in increasing production volumes. For 2024, the company guided its total oil production in the band of 91,000 to 95,000 Bbl/d, suggesting a year-over-year hike of 23%.
On another positive note, Matador plans to turn to sales a net of 103.6 wells this year — including operated and non-operated wells. Its prime priorities include lowering debt, delivering free cashflows and maintaining or increasing dividends.
Overall, handsome commodity prices and expectations for higher production will likely aid Matador Resources’ bottom line.
Risks
However, being an upstream energy player, the company’s overall operations are exposed to extreme volatility in oil and natural gas prices. This is getting reflected in the company’s beta of 3.32.
Stocks to Consider
Better-ranked energy companies include Sunoco LP SUN, Kinder Morgan, Inc. KMI and Murphy USA Inc. MUSA. While Sunoco and Murphy USA sport a Zacks Rank #1 (Strong Buy), Kinder Morgan carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco, the leading independent fuel distributor in the United States, has a stable business model and has relatively lower exposure to commodity price volatility. This is because the partnership distributes fuel to branded distributors under long-term contracts.
With its operating interests in oil and gas pipeline networks spread across 83,000 miles, Kinder Morgan is a leading energy infrastructure company in North America. It derives most of its earnings from take-or-pay contracts, generating stable fee-based revenues.
Murphy USA is a renowned retailer of gasoline and convenience goods, distinguished by its adaptable business model that effectively enhances profitability during periods of economic expansion and recession.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Sunoco LP (SUN) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
Matador Resources Company (MTDR) : Free Stock Analysis Report
