Should I Buy EOG Resources (EOG)? Finance YouTuber Analysis

The YouTuber recommends buying EOG Resources due to its attractive valuation, with a PEG ratio of 0.63, making it the cheapest among its peers even after a significant year-to-date gain. He believes it offers good value when adjusted for growth, despite being a natural gas play.

“I would still want to own some shares of EOG resources here, ticker EOG on that valuation of 63. It's up 28% so far this year, but still a very good value when adjusted for that growth.”

The YouTuber suggests buying EOG Resources, along with other energy stocks, as an attractive value play. He notes the sector's underperformance this year and anticipates 16% earnings growth next year due to cost-cutting and improved efficiency. He also points out that WTI crude prices around the low $60s act as a floor, supporting the sector.

“And that coming earnings improvement should drive returns from here, especially in favorites like EOG Resources, ticker EOG, Diamondback Energy, ticker F&G, and Chevron, ticker CVX.”

The analyst is watching EOG Resources as part of a broader shift into energy and healthcare sectors, which are seen as offering attractive value and portfolio protection during potential market downturns. This aligns with a barbell portfolio strategy.

“Besides the broad ETFs with these sectors like the Energy Spider, the XLE, and the Healthcare ETF, ticker XLV, I'm also watching stocks like EOG Resources, ticker EOG, Chevron, CVX, United Health Group, UNH, and Novartis, NVS.”

The analyst recommends EOG Resources, a natural gas producer, as an undervalued energy stock. Despite being down 2.5% over the last year due to lower oil prices, he believes it has significant upside potential within the value-oriented energy sector.

“Devon Energy here down 18% over the last year. You got EOG Resources, big name in natural gas there, up down 2 and a.5% over the last year. Exon Mobile, one of the largest there, down 3%. So, a lot of the developers getting hit on those lower oil prices, but with a lot of upside potential.”

The YouTuber likes EOG Resources as a natural gas pick due to its position as one of the largest producers in the US. He anticipates higher natural gas prices globally as export facilities are built out. He also points to its strong dividend growth and significant share price return over the past five years.

“I like EOG here because as we start seeing those export facilities built out, seeing that natural gas fetch higher prices around the world.”

The analyst recommends EOG Resources, a major natural gas producer with a 3% dividend, due to expected higher LNG exports. The company has improved efficiency, reducing costs and increasing cash flow, which helps sustain its dividend. Despite past gas price volatility, dividend growth and total return have been outstanding.

“with an increase in LG exports to Europe expected over the next few years this is going to be one to own”

The YouTuber recommends EOG Resources as a strong natural gas play, despite its 3% dividend yield, due to its efficiency and dividend growth. He highlights its 26% annualized dividend increase over five years and a very low 36% payout ratio, providing ample room for future dividend increases even with lower natural gas prices. He notes the company's ability to increase free cash flow and its best-in-class producer status.

“this is a best-in-class producer and natural gas demand is growing with that Renewables use so longer term we should see good cash flow growth and dividends from EOG”

The YouTuber favors EOG Resources as a top energy stock due to massive cash flow from high oil prices, which is being returned to investors through an 82% dividend increase, special dividends, and share buybacks. The company is not overspending on new exploration, leading to strong investor returns.

“EOG increased its dividend by 82% this year and has returned 2.7 billion to investors it's paid out two special dividends and is updating the share buyback program and even after the shares have doubled in the last year analysts have an average target of 15 upside plus growing that dividend.”

The YouTuber identifies EOG Resources as potentially undervalued, with a fair value of $133 per share against a current price of $125, offering a 7% margin of safety via discounted cash flow. Price-to-earnings and Enterprise Value to EBITDA multiples also suggest undervaluation, particularly when considering 10 and 20-year averages, and the company pays a 4% dividend.

“using discount of free cash flow that right now the fair value for this stocks at about 133 bucks a share and the current price is about $125 per share that gives us a margin of safety about 7% now that's a bit low for me on a margin of safety perspective but depending what our research tells us this could be an interesting one to at least add to the bullpen”