Stock Strategist: Don't Be Scared of Diamondback and Viper

[Morningstar Logo]( [Company Site]( [Company News]( [Membership]( [Portfolio]( [Stocks]( [Options]( [Funds]( [ETFs]( [Markets]( [Tools]( [Personal Finance]( [Discuss]( Stock Strategist Don't Be Scared of Diamondback and Viper Here are two undervalued ideas to ride out the challenging times in energy. [tab_bar] by Stephen Ellis | 5/18/2020 5:30:00 PM The coronavirus outbreak has created a huge dent in near-term oil demand and triggered a meltdown for commodity prices. The market appears to be extrapolating the current oil environment to infinity, and that doesn’t make any sense: Shale still accounts for over 10% of the global supply stack, and unless prices rebound to encourage drilling, the painful glut will eventually become a shortage. As a result, oil stocks are cheap. Our top upstream pick, Diamondback Energy [FANG]( hasn’t traded at this level since shortly after its 2012 initial public offering, and its publicly traded mineral rights subsidiary, Viper Energy Partners [VNOM]( has reached an all-time low. Both are pure plays on some of the best U.S. shale acreage. Diamondback checks many of the boxes for investors, with a strong balance sheet, an underappreciated narrow economic moat, and an increasingly prominent focus on free cash flow and environmental, social, and governance concerns. Viper presents an attractive way to piggyback on Diamondback’s attractive Permian acreage. Diamondback is the operator on over 50% of Viper’s acreage and offers exposure to a mineral rights market that could double in size with potential for further upside. Viper is the industry leader in consolidating the royalties market, having spent $2.4 billion in acquiring rights in the past few years. To read more, click [here](. Sponsored Links [Buy a Link Now]( Podcast: Investing Insights From Morningstar.com Listen to a roundup of the latest videos featured on Morningstar.com [in this podcast]( available through iTunes. Free Issue | Morningstar's Stock Newsletter >> Morningstar StockInvestor is celebrating more than 10 successful years of high-quality stock investing. Its two real-money portfolios have outperformed the S&P 500 since 2001. [Get new ideas for the core of your stock portfolio](. Search Most Recent Articles [7 Pieces of Financial Advice for New Graduates]( [Don't Be Scared of Diamondback and Viper]( [5 of the Biggest Fund Downgrades of 2020]( Latest Analyst Reports [Cheniere Energy]( [Magellan Midstream Partners]( [Bayerische Motoren Werke]( [NRG Energy]( [Choice Hotels International]( ABOUT OUR EMAIL TO UNSUBSCRIBE this email address to the Stock Strategist newsletter, please click "reply" and then click "send." This will unsubscribe only this email address to this specific newsletter. All subscription changes will take effect within one business day. Replies are not read by individuals, so please do not use this for queries about Morningstar.com. If you have questions about Morningstar.com or your membership, send a note to [joe@morningstar.com](mailto:%20joe@morningstar.com). ABOUT OUR PRIVACY POLICY Please [click here]( to learn about Morningstar's privacy policy. (c) Copyright 2020. Morningstar, Inc. 22 West Washington Chicago, Illinois, 60602 All rights reserved.