Shares of pure play land and resource management company Texas Pacific Land grew steadily for years. The No. 1 ranked company in its industry, Texas Pacific operates in the resource-rich Permian Basin. Its Relative Strength (RS) Rating got an upgrade Tuesday to 82, up from 78 a day earlier.
Texas Pacific stock traded at 468 in early February 2024. It more than doubled in the last 16 months and traded around 1,128 Tuesday afternoon. Longer term, it rose about 1,056% from a 98 low five years ago in March 2020 amid the Covid market crash.
Texas Pacific Stock Tops Rating Milestone
The elevation to an 82 RS Rating could be a watershed moment for its stock. Market research shows that the best stocks tend to have an 80 or higher RS Rating as they begin their biggest runs. The rating upgrade indicates Dallas-based Texas Pacific Land stock may be prepping for a sprint higher.
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Many people think of oil wells when they think of Texas. But Texas Pacific stewards land with water resources in addition to oil wells. In fact, last year the company developed a new, more energy-efficient water desalination process. It successfully conducted a pilot and has begun constructing a small-scale water test facility with an initial capacity of 10,000 barrels of water a day.
Small-cap Texas Pacific reported a 5% increase in earnings last quarter to $5.24 per share on a 13% rise in revenue to $196 million. Revenue growth rose every quarter this past year from 7% to 10%, 11% and then 13% for first quarter 2025. Its earnings growth was less hearty during that period. It grew 14%, -7%, 5% and 5%.
Among its other ratings Texas Pacific has an 82 Earnings Per Share Rating. That puts it in the top 18% of all companies for recent and long-term profit growth. Its 72 Composite Rating shows it tops 72% of all stocks overall. That's less than what The IBD Methodology investors like though. Look for that to improve to a 90 or higher rating.
The number of funds that own TPL stock rose from 943 in September to 1,274 at the end of March, according to MarketSurge. And Texas Pacific has a best-possible SMR Rating (sales + profit margins + return on equity) of A.
Analysts Not On Board Yet
One yellow flag is its E Accumulation/Distribution Rating. That indicates that funds have been selling shares over the past 13 weeks, not too surprising given the market correction earlier this year. Look for that to improve to a C rating or better.
Texas Pacific stock traded at about 1128 Tuesday afternoon, up about 1.5%. Its stock took a hit in mid-May and fell for 10 trading sessions in a row after the company reported earnings on May 7.
It said in its earnings release that it had "oil and gas royalty production of 31.1 thousand barrels of oil equivalent ("Boe") per day, a company record," and its earnings rose 5% to a strong $5.24 a share. However, that was 3 cents below consensus on the Street and its stock fell. Look for the stock to continue recovering after its strong showing Tuesday.
Texas Pacific Land is the No. 1 ranked stock among its peers in the 15-stock Oil & Gas-Royalty Trust industry group. Sabine Royalty Trust and Pacific Basin Royalty Trust are also in the top five ranked in the group.
IBD's unique Relative Strength Rating measures share price performance with a 1 (worst) to 99 (best) score. The score shows how a stock's price movement over the last 52 weeks stacks up against all the other stocks in our database.
This article was created automatically with Stats Perform's Wordsmith software using data and article templates supplied by Investor's Business Daily. An IBD journalist may have edited the article.
Please follow James DeTar on Twitter @JimDeTar
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