Tuesday's IBD 50 Stocks To Watch pick, Northern Oil & Gas, is approaching a new buy point during the current stock market volatility. But shares tumbled more than 3% midday Tuesday amid a sharp decline in oil prices.
Stocks To Watch: Northern Oil & Gas
Minnesota-based Northern Oil & Gas is an oil and natural gas producer and is a leading non-operated working interest franchise in the premier shale basins across the U.S. A non-operated working interest means the company owns an interest in the shale basin, but doesn't participate in the actual operation of the oil well.
In the most recent quarter — reported on Nov. 5, — the company earned 84 cents per share on sales of $131.5 million, respective year-over-year increases of 65% and 178%.
In early February, the company upped its quarterly dividend payment to 14 cents per share, a 75% increase over the prior quarter, resulting in a 2.3% annualized yield.
The 14 cent per share dividend was above the company's previous plan for 12 cents per share, said Chief Financial Officer Chad Allen in a press release. "This is a function of continued strong free cash flow, the achievement of balance sheet targets ahead of schedule, and the strong outlook for our business as we begin 2022."
Northern Oil will report earnings on Feb. 25 before the market opens. The company is expected to earn $1.12 per share on revenue of $262.4 million, according to FactSet. That represents year-over-year increases of 56% and 424%, respectively.
Join IBD experts as they analyze leading stocks in the stock market rally on IBD Live
Northern's IBD Stock Ratings
Northern ranks No. 24 in the IBD 50. (The IBD 50 is a list of leading growth stocks with strong relative price strength and top-notch fundamentals.)
The stock shows an 86 out of 99 Earnings Per Share Rating, and a perfect A SMR Rating, according to IBD Stock Checkup. The EPS Rating tracks a company's short- and long-term earnings performance. The SMR Rating analyzes a company's sales, margins and return on equity, and offers a letter grade from A (the best) to E (the worst).
IBD Stock Checkup also shows that NOG stock has a perfect 99 IBD Composite Rating. The Composite Rating helps investors easily gauge the quality of a stock's fundamental and technical metrics.
Stock Market ETF Strategy And How To Invest
NOG Stock Eyes New Buy Point
Northern stock continues to build a cup with handle with a 25.57 buy point, according to IBD MarketSmith chart analysis. NOG shares fell more than 3% midday Tuesday, as U.S. oil prices slid more than 4% on easing Russia-Ukraine tensions. West Texas Intermediate crude traded below $92 a barrel.
Positively, the stock's relative strength line is showing signs of strength and has risen sharply since mid-December. It is just off its old highs. The RS line should hit a new high on the breakout day or shortly thereafter to confirm the stock as a market leader. The RS line measures the stock's price performance vs. the S&P 500.
Keep in mind that investors should be more cautious, as the current stock market uptrend continues to struggle. Avoid most breakouts, except for perfect setups in names with strong fundamentals.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
