Best Stocks: An energy stock that’s a cash-flow machine and in a nice uptrend

Posted By: EN Todayon: February 05, 2026In: General Energy News

(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — We’re trying to bring you stocks in healthy uptrends that have recently broken out or are about to break out. The S & P Energy sector has been fertile ground for this lately and we’ve done a bunch of names in the space for you. Sean wanted to spotlight Diamondback Energy (FANG) for today’s column and it’s a great set-up. Breakout confirmed. There may be a retest, but I think this one can continue to roll up. On another note, if you took the Baker Hughes (BKR) and Exxon (XOM) trades with us this winter, now is when you want to start rolling up stops. Okay, here’s the story behind Diamondback followed by the technicals. Best Stock Spotlight: Diamondback Energy, Inc. (FANG) Sean — Take a look at Diamondback’s investor presentation . Once you get past the intro slides and the biblically long disclosure, the very first slide with meaningful content on it is dedicated to shareholders. It’s a guide on how Diamondback Energy plans to pay back shareholders. According to their presentation, FANG is committed to returning at least 50% of quarterly free cash flow to shareholders. Through the third quarter, $892M was returned through dividends and share buybacks, representing exactly 50% of free cash flow. Love to see it! FANG has grown its payout by 7.2% annually since its inaugural dividend in 2018. They currently pay a 2.42% annual dividend, paired with an $8B share buyback authorization that has a little less than half of the authorized amount of capital left to be deployed. FANG has repurchased 36.1 million shares since Q3 of 2021, or 20% of its starting float since then. This oil company keeps costs incredibly low. Management notes that its “best-in-class cost structure” allows it to remain profitable even when oil prices are low. As of the most recent earnings report, the breakeven price at which FANG was profitable was $30 per barrel. The price at which its dividend remains intact is $37 per barrel, about 42% below today’s oil prices. This stock is a cash-flow machine at $65 WTI. The company is intensely focused on returning capital to investors, and as we enter early 2026, energy companies are beginning to be re-rated higher. So far, FANG is up 8% this year and just 2% over the past year on a total return basis. The re-rating is compelling, while the dividend provides room for more patience than usual, setting FANG up well for 2026. Risk management Josh — The chart is showing textbook accumulation of Diamondback. It’s six months of range bound consolidation, and then all of a sudden the sellers stop selling and the buyers are in control. It’s acting the way you want a quality energy stock to act during a quality energy stock rally. It wasn’t the first to break out, but it’s got one of the largest bases in the group and now this stock is leaving orbit. FANG is above both the 50-day and the 200-day moving averages and the 50-day is finally trending up. That tells you momentum has reasserted itself. The next real test is up around $170–$172, where rallies have stalled before, while the 200-day near 145 remains the line in the sand if this move is going to stay intact. This level is meaningful because you can see it’s where the buyers and sellers oscillated around from April until the breakout two weeks ago, that’s eight months worth of congestion. A retest of the mid-140’s with a breakdown would knock this name off the list. RSI is pushing into the high $60s, which confirms strength but also tells you this is no longer an early or easy entry. More cautious buyers can wait to see if the stock acts well on a retest of the rising 50-day (around $153). DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. 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