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Here's Why Pioneer (PXD) is an Attractive Investment Bet Now

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Zacks Equity Research
·3 min read
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Pioneer Natural Resources Company PXD has witnessed upward earnings estimate revisions for 2021 and 2022 in the past 30 days. Also, this leading independent oil and gas exploration and production company’s stock price has surged 42.3% year to date versus the sector’s rise of 22.4%.

Factors Favoring the Stock

The price of West Texas Intermediate crude, which is trading above $65 per barrel (at pre-pandemic levels), has improved significantly from the negative territory touched in April 2020. The momentum is likely to continue since the coronavirus vaccine rollout will possibly help the economy recover strongly this year, thereby aiding fuel demand.

Recently, the price of oil jumped to record levels in more than a year after it was decided by OPEC+ (OPEC and its non-OPEC partners) that they will extend most of the oil output cuts till April.

Overall, the massive improvement in oil price is definitely a boon for oil explorers and producers. Pioneer Natural is also well placed to capitalize on the favorable pricing scenario since the company has a strong presence in the low-cost Permian basin. The upstream energy player has a huge inventory of premium wells that will likely generate significant returns for the company.

The upstream firm recently announced a dividend hike. Importantly, in 2020, the Zacks Rank #2 (Buy) company delivered free cashflow of $689 million and the metric will likely improve with the business scenario gradually getting better on rising oil prices. Notably, Pioneer projects free cashflow for 2021 at $2 billion. Thus, the company will likely continue to reward investors with dividend payments.

Moreover, Pioneer Natural has considerably lower exposure to debt capital than the composite stocks belonging to the industry. This reflects the company’s strong balance sheet on which the firm can rely on to sail through the pandemic-induced business uncertainty.

Other Stocks to Consider

Other prospective players in the energy space include EOG Resources, Inc. EOG, ConocoPhillips COP and Diamondback Energy, Inc. FANG. While EOG Resources and ConocoPhillips carry a Zacks Rank #2, Diamondback sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources is likely to see earnings growth of 206% in 2021.

ConocoPhillips has seen upward estimate revisions for 2021 earnings in the past 30 days.

Diamondback is likely to see earnings growth of 55% in 2021.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

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ConocoPhillips (COP) : Free Stock Analysis Report

EOG Resources, Inc. (EOG) : Free Stock Analysis Report

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Zacks Investment Research