Topic: Growth Stocks

DEVON ENERGY CORP. $59.82 – New York symbol DVN

DEVON ENERGY CORP. $59.82 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 406.0 million; Market cap: $23.9 billion; Dividend yield: 1.5%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 58% gas and 42% oil.

In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company is now focused on its North American projects, which include conventional production, shale oil in Texas and oil sands in Alberta.

Devon is now further tightening its focus by selling its natural gas gathering and processing assets for $300 million to $500 million.

Meanwhile, the company’s daily production averaged 697,600 barrels of oil equivalent in the three months ended June 30, 2013. That’s up 2.8% from 678,900 barrels a year earlier. Cash flow per share jumped 21.7%, to $3.20 from $2.63, on the increased production and higher oil and gas prices.

Devon is spending as much as $7.0 billion to explore and develop its properties this year. The company can easily afford this expense: its $10.2 billion of debt is a manageable 42.7% of its market cap, and it holds cash of $4.3 billion, or $10.59 a share.

The stock trades at 4.7 times Devon’s forecast 2013 cash flow of $12.80 a share, based on the latest quarter. It yields 1.5%.

Devon Energy is a buy.

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