Tuesday's IBD 50 Stocks To Watch pick — Diamondback Energy — is one of the top stocks to buy and watch following a breakout move. Shares climbed more than 1% Tuesday morning after the company's earnings and are in the 5% buy range past their latest buy point.
Stocks To Buy And Watch: Diamondback Energy
Midland, Texas-based Diamondback Energy is an oil and gas explorer and producer in the Permian Basin of Texas and New Mexico.
Late Monday, the company topped earnings estimates and matched sales views, as the oil producer returned nearly $900 million to its shareholders while production remained mostly flat in Q3. Diamondback Energy's EPS increased 120% to $6.48. Third-quarter revenue came in at $2.437 billion, up 28% compared to last year, according to MarketSmith.
Last month, Diamondback acquired FireBird Energy in exchange for 5.86 million shares of common stock and $775 million of cash.
"This bolt-on acquisition adds significant, high-quality inventory right in our backyard," said Travis Stice, chairman and CEO of Diamondback, in the press release.
"With over 350 locations adjacent to our current Midland Basin position, this asset adds more than a decade of inventory at our anticipated development pace, including inventory that competes for capital right away in Diamondback's current development plan."
FANG's IBD Stock Ratings
FANG stock shows a best-possible a 99 Earnings Per Share Rating and a best-possible SMR Rating of A, according to IBD Stock Checkup.
Diamondback Energy grew earnings by an average 147% over the last three quarters, while sales grew a strong 65%. In 2021, pretax margins and return on equity measured 39% and 19%, respectively. Those are solid figures.
This stock to buy and watch shows a perfect 99 IBD Composite Rating.
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FANG Stock In Buy Range
FANG stock is breaking out past a cup base's 162.34 buy point, according to IBD MarketSmith pattern recognition. Shares broke out Monday and are in the 5% buy zone up to 170.46. With the stock market uptrend under pressure, remember that breakouts can fail more often.
Shares rallied more than 1% Tuesday after the company's earnings report.
The relative strength line hit a new high Tuesday, confirming the energy stock as a market leader. A strong RS line during a struggling stock market uptrend is a key technical indicator of strength.
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