Tuesday's IBD 50 Stocks To Watch pick — oil explorer and producer Matador Resources — is one of the top stocks to buy and watch. Matador stock reclaimed a key level, the 50-day moving average, last week after the company's strong Q2 earnings. And shares rose almost 1% Tuesday midday, recovering a large part of Monday's losses.
Stocks To Buy And Watch: Matador
Dallas-based Matador Resources is an explorer and producer of oil and natural gas. The company's current operations are primarily focused in the Delaware Basin in West Texas.
In the second quarter, Matador reported earnings that soared 240% to $3.47 per share, and sales surged 164% to $943.9 million vs. the year-ago period. The earnings report on July 26 sent shares up more than 8%.
"This is the best quarter that we've had in company history ... and we feel we've reached a new inflection point as our production has climbed to over 100,000 barrels of oil or gas equivalent per day, which puts us in a position of being the strongest time in our history from a financial or operating point of view," said Chief Executive Joseph Foran.
IBD Stock Ratings
Matador stock shows a best-possible 99 Earnings Per Share Rating and an exemplary SMR grade of A, according to IBD Stock Checkup. The SMR Rating analyzes a company's sales, margins and return on equity, and offers a letter grade from A (the best) to E (the worst). In the latest year, pretax margins and return on equity measured 42% and 32%, respectively. Meanwhile, sales growth averaged 139% over the last three quarters.
The stock has a perfect 99 IBD Composite Rating, ranking among the top stocks within the U.S. oil and gas explorers and producers industry group. Investors can use the IBD Composite Rating to easily gauge the quality of a stock's fundamental and technical metrics. Other top energy stocks include IBD Leaderboard name New Fortress Energy. Shares are rapidly approaching a cup base's 52.47 buy point.
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Matador Stock Eyes Buy Point
Matador shares are moving up the right side of a cup base that features a 67.88 buy point, according to IBD MarketSmith pattern recognition. With the stock about 15% away from the new entry, be on the lookout for a potential handle to offer a lower entry.
Last week, the stock regained its key 50-day moving average line after the company's strong earnings results sent shares soaring. And on Tuesday, the stock looked to rebound from Monday's losses, moving up nearly 1% in midday trading.
A key technical factor to watch is the stock's relative strength line. Despite a recent rebound, the RS line remains relatively far from its old highs set back in June. A weak RS line is normal during the base-building process, but it should strengthen significantly as the stock shapes the right side of a new base.
The RS line should hit a new high on the breakout day or shortly thereafter to confirm the stock as a market leader.
Following recent technical strength and strong quarterly earnings and sales results, Matador is one of the top stocks to buy and watch in today's market.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top stocks to buy and watch and the stock market.
