DVN - Devon Energy: The Turnaround Is Likely Getting Closer

2024-06-21 11:30:52 ET

Summary

• Devon Energy investors have underperformed the market as investors chased the AI gold mine.
• The energy sector's underperformance has affected Devon Energy's buying sentiments.
• Devon has continued to execute well. Management is focused on share repurchases for its capital return strategies.
• DVN's relative undervaluation to its E&P peers should help mitigate the potential near-term downside.
• I argue why DVN's bottom is getting increasingly close, improving opportunities for dip-buyers to add more shares.

Devon Energy Stock Has Underperformed

Devon Energy Corporation ( DVN ) investors have underperformed over the past year as the GenAI-driven hype likely saw investors reallocate their positions out of the energy sector ( XLE ). Notwithstanding its position as a leading US independent E&P player, DVN posted a flat total return over the past year. However, the AI infrastructure players have helped the VanEck Semiconductor ETF ( SMH ) outperform as investors chase the AI gold mine. Nvidia ( NVDA ) stock went on a rapid ascent before surpassing the market cap of Microsoft ( MSFT ) and Apple ( AAPL ). As a result, NVDA's meteoric rise has likely helped to mint more NVDA multi-millionaires who kept their faith in the Jensen Huang-led company....

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