This Stock is a “Strong Buy” and is Ready to Break Out Soon

Making serious money can be difficult when the Dow Jones and Nasdaq are sitting near record highs.

So to earn massive gains in a short period of time, we need to look at beaten-up stocks and identify the ones that have the best chance of bouncing back by 20%, 50%, or even 100% within months.

Sometimes stocks fall hard because their business model is broken. Think of bankrupt retailers or companies that still sell outdated technology.

But other times, stocks fall because of a market overreaction. Fearful investors – worried about the costs of an acquisition, the departure of a prominent executive, weak earnings, or rumors of an adverse public relations event – will dump their shares and push them to bargain levels.

To identify the stocks that are poised for big bounce-backs and can surge quickly back to the upside, we tap into the Money Morning Stock VQScore™ system.

Developed from our proprietary valuation algorithm, the VQScore identifies undervalued stocks with the highest profit potential by using a blended analysis of a company’s earnings-per-share acceleration and building demand for the stock.

The VQScore system runs on a scale of 1 to 4. A score of 4 indicates a stock is a “Strong Buy.”

Why Oil Will Rise Throughout 2019

Oil prices are set to rise in the United States as the summer driving season commences.

U.S. sanctions on Venezuela and Iran are having a profound impact on refiners’ ability to procure crude required for diesel fuel.

Russia and OPEC (which includes Saudi Arabia) will continue to cut crude production to bolster support.

And optimism continues to rise about a trade deal between the United States and China.

Today, we found the best oil stock to buy that recently earned one of our top VQScores and is ready for a huge bounce-back in the next few months.

The Permian Bounce-Back Oil Stock to Buy

Cimarex Energy Co. (NYSE: XEC) is an oil exploration and production company based in Denver, Colo.

It’s an oil and gas producer with extensive production in the Permian Basin and Mid-continent fields. The firm produced 251,000 barrels of oil per day in the fourth quarter of 2018.

Last year, the company’s stock plunged thanks to a sharp decline in oil prices during the third and fourth quarters of 2018. But things are about to turn around – and quickly – for this stock…

There is no place hotter for oil price right now than the Permian Basin in West Texas, where Cimarex has extensive operations.

On Friday, Chevron Corp. (NYSE: CVX) announced plans to purchase Anadarko Petroleum Corp. (NYSE: APC), a large player in that region. Chevron is competing against its large rival, Exxon Mobil Corp. (NYSE: XOM), to secure acres and maximize every oil well.

This M&A rush comes at a time when oil prices are set to rise and pipeline expansion across the region will help reduce the glut of crude in the Permian.

Where Cimarex Fits into the Picture

Cimarex has increased daily production by 17% annually over the last three years.

And it’s about to make an even bigger splash in the Permian this year. According to the company’s Q4 report, it plans to invest 85% of its capital expenditures into the Permian.

As it expands, the firm will become a takeover target in this red-hot region. It wouldn’t surprise me at all to see Exxon buy Cimarex out completely to keep up with Chevron.

Cimarex’s stock is cheap compared to its industry rivals, too. XEC stock trades at a price/earnings ratio of just 8.08 – less than half the industry average of 19.06.

Its price-to-book ratio is also only 1.93, which is much lower than its peer-average of 3.30.

But the number that is so much more important: Cimarex’s 4.75 VQScore.

This number means the stock is a “Strong Buy” because shares are ready to break out soon.

In fact, XEC broke out and gained more than 4.4% last Friday. But there’s no sign that Cimarex is set to slow down anytime soon.

The energy giant has a potential upside of 52% to $105 per share.

Higher oil prices mixed with greater pipeline capacity in the Permian Basin make XEC stock one of the top oil companies to rebound in the year ahead.

And don’t forget that it remains a takeover target by a larger rival trying to shield itself from larger E&P giants looking for access to the Permian.

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Source: Money Morning