Bullish Devon Energy eyes a new top but should you buy now?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on May 14, 2022
  • Devon Energy stock has been bullish since August 2021.
  • Soaring energy prices have helped the company beat estimates.
  • Devon is a hold at the current level.

When Devon Energy Corporation (NYSE:DVN) reported its quarterly earnings on May 3, it ticked all boxes right. The company’s core earnings per share were $1.88, more than four times from last year. The earnings were also higher than the $1.76 projections. The board of directors also boosted its quarterly dividend by 27%. The company’s share repurchase program was raised by 25%. 

The quarterly earnings by Devon underlines the exponential growth that energy names have enjoyed. The earnings come at the back of skyrocketing energy prices, making sector names a go-to for investors.

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With the boosted dividend, Devon will now allocate investors $3.94 per share in FY22. At the current share price of around $68, that equates to a dividend yield of 5.8%. The yield is significantly higher compared to the S&P 500 of 1.37. The comparison makes Devon a robust dividend stock and one investors should put in their holding.

Devon Energy stock maintains a bullish momentum

Source – TradingView

Technically, Devon stock has maintained a bullish momentum that started in August last year. At the current price of $68.70, Devon is trading close to the previous top and looking likely to break above. An RSI reading of 60 shows that the stock is yet to enter the overbought region. 

With strong earnings and outlook, Devon stock is a hold at the current level. However, investors should look to buy the stock on a 50-percent retracement. A retracement to the ascending trendline will also open buy opportunities.

Summary

Hold Devon Energy as it will most likely break past the previous top. New positions should be taken after a potential 50-percent retracement or to the ascending trendline.

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