Wall Street analysts make their names on the quality of their stock notes, some of which stand out above their peers. The best analysts bring a sharp eye to the table, and a combination of solid knowledge and deep experience that can be trusted for their stock calls. So, when those top analysts start picking certain stocks as the right choice for investors, we should all take note.
And now, the main analyst of the street Trust Nell Dingman, has been doing that. Dingmann is ranked #1 among over 8,500 active stock analysts based on 76% of successful stock calls over the past 12 months. Over that 12-month period, an investor following Dingman’s advice would have realized an impressive 31% return.
Dingman of Energy storage Expert and he’s picking his picks for the coming months, so let’s take a closer look at some of the sector’s calls and why you might want to ride the coattails. Adding to the appeal of these stocks, according to Tipranks data, all are rated as strong buys by the analyst consensus, with double-digit upside potential. Here are the details, along with Dingman’s comments.
Kodiak Gas Services, Inc. (KGS)
We begin with the natural gas division, where Kodiak Gas Services is a multi-billion dollar player in the natural gas industry. This is a critical step in moving gas from production sites through pipelines to refineries and end users. Kodiak is a large-scale provider of compression services and infrastructure contracting in the US gas sector, and describes its services as ‘critical to our customers’ in the safe production of natural gas.
The company was founded in It was in 2010, and today it occupies leading positions in the main production basins in America. The company has extensive operations in the Permian Basin, particularly in West Texas. In addition to direct compression services, Kodiak designs and builds gas compression stations. The company’s revenue-generating compressor equipment fleet has more than 3 million horsepower.
Last summer, Kodiak entered the realm of publicly traded stocks with an IPO that closed on July 3. The shares were seen at $16 per share, a low valuation – the company had initially priced between $19 and $22 per share. The sale totaled 16 million shares and raised $231.4 million in cash from the company.
In the year On August 9, Kodiak released its first quarterly financial results as a public company, and the results showed a fundamental improvement. Top-line revenue of $203.3 million was up more than 14 percent year over year. In the end, net income nearly doubled compared to the same period last year and generated EPS of 30 cents. Kodiak’s operations have been generating higher free cash flow over the past 12 months. Last quarter, the company recorded a FCF loss of $2.2 million, but the current report shows a positive FCF of over $33 million.
For Dingman, Kodiak’s strong position and recently proven ability to generate cash are key points of interest for investors. The Trust’s analyst wrote: “Kodiak delivered strong first-quarter results as a public company, with similarly positive residual 2023 expenses/income increases.” The company continues to benefit from a tight gas compressor market with limited competition, with the company’s efficiency achieving nearly 100% horsepower utilization. KGS is one of the few mid-cap companies with strong pricing power and a desire to continue oversupply for the next few quarters. We forecast continued strong FCF driven shareholder returns and additional debt repayments.
These comments come with a Buy rating on this newly publicized stock and a $24 price target, indicating a 35% downside potential over the next 12 months. (To see Dingman’s track record, Click here.)
In short time, Kodiak has picked up 8 analyst reviews as a public component, with a 7-to-1 split favoring Holds over Buys, giving the stock a consensus rating of Strong Buy. A trading price of $17.82 and an average price target of 24.25 combined suggest a 36% gain for the coming year. (look out Kodiak stock forecast.)
Northern Oil and Gas (Christmas)
Next Northern Oil & Gas is an exploration and production company operating in the three most important hydrocarbon producing basins in North America: Montana’s Williston Basin and the Dakotas; the Texas-New Mexico Permian Basin; and the Marcellus Formation of western Pennsylvania. These geological formations contain the oil and gas reserves that made the United States the world’s leading oil and gas producer about 15 years ago.
The North has made the most of strong holdings and operations in these rich hydrocarbon regions. The majority of the Company’s operations, 64% of the Company’s total activities, are in the Williston Basin holdings of ~183,500 net acres. The North Marcellus and Permian fields total 62,000 and 10,000 acres, respectively, and account for 16% and 20% of the Company’s hydrocarbon production. About 60% of the company’s production is in liquids, primarily crude oil but including natural gas liquids, about 40% of which is natural gas.
Coming to results, Northern reported oil and gas sales of $416.5 million in the second quarter of this year, down 24% year-over-year but beating estimates by $4.4 million. The company’s adjusted net income per common share, its non-GAAP EPS, was listed at $1.49. Down from $1.72 a year ago, 2Q23 EPS was 15 cents better than the consensus estimate. NOG generated $47.6 million in free cash flow during the quarter. These results are based on a record quarterly oil volume of 90,878 barrels per day. Production increased 4% from 1Q23, and 25% from 2Q22.
In the weeks following the 2Q23 release, Northern announced the closing of its latest acquisition – the Northern Delaware Basin assets from Novo Oil & Gas. The transaction cost North a total of $468.4 million in cash and was made jointly with Earthstone Energy. North and Earthstone have entered into a joint operating agreement regarding the future development of the Novo properties.
Returning again to senior analyst Dingman, he draws attention to the northern flow of money and the state’s activities. Dingmann said in a recent note on the stock: “Northern is in a unique position after completing several, what we consider to be acceptable acquisitions, with improved baseline production and a strong balance sheet.” We forecast the company to generate roughly 30% of ’24 FCF yield. Although NOG recently hit a 52-week high stock price, it is one of the highest in our coverage group. The company is in the enviable position of being the largest non-performing E&P for any future recognition deal.
Looking ahead, the Truist analyst maintains a Buy rating on NOG, and the $56 price target indicates that it will appreciate by 39% over the next year.
NOG has a strong buy consensus rating from 9 recent Street analysts, including 8 for buy and 1 for hold. The average price target here is $47.11 and the sell price is $40.14. Together, these figures represent a 17% one-year upside potential. As an added bonus, NOG also offers profits. The current payout stands at $0.38 per quarter, yielding ~3.1% (see Northern stock forecast.)
Cord Energy (CHRD)
Last on our list of Dingman picks is Chord Energy, another operator in the North Plains Williston Basin. Chord activity in greater Williston is primarily concentrated in North Dakota, with some extensions into Montana. With approximately 963,000 net hectares of holdings, Chord is a major player among the region’s oil and gas producers.
Chord currently operates 4 rigs using unconventional methods to extract oil from underground reservoirs. Most of the company’s reserves consist of oil, 57%. Most of the rest is natural gas and natural gas products. Chord has a history of expanding its footprint through strategic acquisitions, and in May of this year the company entered into an agreement with XTO Energy. Chord will acquire approximately 62,000 net acres from XTO in Williston for $375 million in cash. 77% of the new acreage is undeveloped.
The financial nature of that transaction shows Chord’s underlying strength — the company can generate more liquid assets.. In 2Q23, the company had net cash from operations of $408.2 million and adj. Free cash flow totaled $105.3 million. Chord’s cash reserves and cash flow enabled it to purchase XTO, and in Q2 the company returned $87 million in capital to shareholders. The return of capital was partially offset by the payment of a $1.36 base-plus-variable common dividend on August 29, 2011.
Elsewhere, the company recently showed mixed financial results, with a strong top line and missing bottom line in 2Q23. The revenue figure of $912.07 million was up 15.5%, and beat forecasts by $259.7 million. On the bottom line, non-GAAP EPS of $3.65 was down significantly from $7.30 in the prior-year quarter, and was 18 cents below expectations.
The missed earnings didn’t bother Dingman, who sees Chord’s productivity and FCF as key factors in investor speculation. As Dingman writes, “Chord continues to produce some solid Bakken holes driven by improved hole spacing, wide analog, efficient drilling and finishing, among many other improvements. The results resulted in consistently improved positive returns across most key areas, resulting in FCF that allows for material shareholder returns and near-term acquisition potential. We have forecast for continued stable production which we prefer to be in the basin alone.
These comments meet Dingman’s buy rating, and his price target, set at $221, indicates that the shares will appreciate by 40% over the next 12 months.
Narrowing in, we find that Chord 8’s latest analyst reviews include 7 Buys with one Hold, with a consensus rating of Strong Buy. The shares are trading at $158.23, and their average price target of $183.78 represents a 16% gain over a one-year horizon. (look out Chord Energy stock forecast.)
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Disclaimer: The opinions expressed in this article are those of the featured analysts only. The content is intended for informational purposes only. It is very important to do your own analysis before making any investment.