Here's Why Southwestern (SWN) is an Attractive Investment Bet
Southwestern Energy Company SWN has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days. So far this year, the Zacks Rank #2 (Buy) stock has gained 44.4%, outpacing the industry’s 41.7% growth.
What’s Favoring the Stock?
Since the beginning of this year, the price of natural gas has risen drastically, thanks to increased consumption across most sectors. Being a leading producer and marketer of natural gas and natural gas liquids, Southwestern Energy is well-positioned to gain in the favorable commodity pricing scenario. In the gas-rich prolific Appalachia, SWN operates across 768,000 net acres, while in Haynesville, the company’s activities are spread over 257,000 net acres.
Southwestern Energy’s production outlook seems bright, backed by 15 years of core inventory. Banking on a large reserve and inventory base, SWN has lowered its risk profile. It is strongly focused on returning capital to shareholders, as reflected in its announcement of a $1 billion share repurchase program. The authorization is to repurchase $1 billion of shares through the end of 2023.
Backed by its resilient business model, Southwestern Energy expects free cashflows of roughly $1 billion in 2022 and approximately $2 billion in the next year and beyond.
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Other Stocks to Consider
A few other top-ranked stocks in the energy space are Chesapeake Energy Corporation CHK, Marathon Petroleum Corporation MPC and Exxon Mobil Corporation XOM. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chesapeake Energy is a premium natural gas operator and is well-positioned to gain from the significant improvement in gas price in the past year. In the prolific gas-rich Marcellus shale play, CHK’s operation spreads across roughly 650,000 net acres, where an average of four to five rigs will be operating this year. Chesapeake Energy also has a strong presence in Haynesville and Eagle Ford shale play, making the production outlook bright. Overall, being a leading upstream energy player, CHK has more than 15 years of inventory, signifying more than 2,200 gas locations.
As a leading, integrated, downstream energy player, Marathon Petroleum is the operator of the largest refining system in the nation. Handsome margins and throughput in all regions are aiding Marathon Petroleum.
The positive trajectory in oil price is a boon for ExxonMobil’s upstream operations. This is because ExxonMobil has a pipeline of key projects in the Permian – the most prolific basin in the United States – and offshore Guyana.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
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