Why Devon Energy Corp. Shares Could Pop Another 20%

Does this analyst make a good case? Or is it just more noise from Wall Street?

Jul 7, 2014 at 10:26AM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Devon Energy (NYSE:DVN) gained 1% in premarket trading Monday after Citigroup upgraded the independent energy company from neutral to buy

So what: Along with the upgrade, analyst Robert Morris boosted his price target to $96 (from $75), representing about 21% worth of upside to Friday's close. So while contrarian traders might be turned off by Devon's price strength over the past year, Morris' call could reflect a sense on Wall Street that its production growth prospects still aren't fully baked into the valuation.

Now what: According to Citigroup, Devon's risk/reward trade-off is rather attractive at this point. "[T]he market is not fully recognizing the value of Devon's midstream assets via its ownership interest in Enlink (MLP) and Enlink Midstream (GP) and the potential for future dropdowns from its Canada and Eagle Ford midstream assets," said Morris. "Up until this year, Devon's stock had significantly lagged its peers over the prior five years due to its limited exposure to or inventory of opportunities to grow its oil production, high exposure to low growth natural gas and NGL assets, as well as wide Canadian heavy oil price differentials." Given Citigroup's solid stock-picking track record -- currently ranked in the top 10% of our CAPS community -- resource-savvy Fools might want to take a closer look at Devon.

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Brian Pacampara has no position in any stocks mentioned. The Motley Fool owns shares of Devon Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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