As we embark on our investment journey into 2024, I’m quite disenchanted with US stocks, largely because there are some serious recessionary red flags waving frantically at us. But I do like a small-cap stock in the energy sector, in part because it didn’t just have a huge run-up in November-December 2023 with most other names. It’s called Chord Energy (CHRD), writes Crista Huff, portfolio manager at Freedom Capital Management.
As a bonus, it’s got a big dividend yield! The Houston-based company was formed in July 2022 upon the successful merger of Whiting Petroleum Corporation and Oasis Petroleum Inc. Chord Energy’s focus is on the exploration and production of crude oil, natural gas, and natural gas liquids in the Williston Basin, which overlaps a few states and territories in the US and Canada, including North Dakota and Saskatchewan.
CHRD could easily appeal to growth, value, and/or income investors. The stock’s hefty price is matched by Wall Street’s hefty 2024 earnings per share (EPS) consensus expectation of $26.69. The result is a single-digit price/earnings ratio. The company’s long-term debt-to-capitalization ratio is incredibly low at 8%.
The company regularly returns cash to shareholders. In 2023, the variable quarterly dividends totaled $11.88, resulting in a yield of about 7.2%. There’s also a $750 million share repurchase authorization in place.
These are fantastic fundamentals, but you don’t have to take my word for it. Almost every Wall Street analyst who covers Chord Energy gives the stock an Outperform or Buy rating.