My Top Oil Stock to Buy in December
Oil prices are having another volatile year. West Texas Intermediate (WTI), the primary U.S. oil price benchmark, has done a complete roundtrip. It started in the mid-$70s and rocketed into the triple digits following Russia's invasion of Ukraine. Crude has since given back virtually all that ground on concerns the global economy is barreling toward a recession.
Even with all that volatility, shares of Diamondback Energy (NASDAQ: FANG) are up more than 30% on the year. However, the stock is still pretty cheap, given the free cash flow it can produce at the current oil-pricing level. On top of that, shares are down 15% from their recent peak, making the stock even cheaper. Adding to Diamondback's value proposition is that it pays an attractive and growing dividend, repurchases its cheap stock, and makes value-enhancing investments. These factors make it top my list as the best oil stock to buy this December.
Diamondback Energy has been feasting on higher oil prices this year. The company expects to produce more than $4.3 billion of free cash flow in 2022, well above the $2.4 billion it generated last year. That assumes crude averages $80 a barrel in the fourth quarter, which is right around its current level. With Diamondback Energy's market cap recently around $25 billion, it trades at a 17% free-cash-flow yield. That's one of the highest levels of its peer group:
Source Fool.com
