2024-02-05 13:30:00 ET
Summary
- Devon Energy Corporation stock has underperformed the S&P 500 significantly since my previous downgrade, as I urged caution.
- The collapse in natural gas prices justifies a substantial de-rating in DVN's valuation.
- Devon Energy's business model remains more exposed to oil and gas cyclicality, suggesting investors must be careful about adding at cycle peaks.
- However, I explain why DVN could be close to a cycle bottom, in line with my observation of the favorable price action in crude oil futures.
- It's timely for me to finally turn bullish, encouraging investors to buy the dip before the rest of the market gleans the opportunity.
I last updated Devon Energy Corporation ( DVN ) investors in November 2023, arguing they should reconsider trying to catch the falling knife on DVN. I enunciated that the downtrend bias on DVN hasn't waned, as buying sentiments remained tepid in oil and gas stocks. That thesis has panned out as DVN has underperformed the S&P 500 ( SPX ) ( SPY ) significantly since my downgrade to a Sell....
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Devon Energy: Fears Have Likely Peaked, Time To Turn Bullish (Upgrade)