Trump’s Blast from the Past Approach Should Boost Devon Energy

Love him or hate him, Donald Trump is now the President of the United States once again. Given the sharp contrasts between him and former President Joe Biden, it’s invariable that investors will need to adapt to shifting realities. The good news? We’re not really dealing with complex narratives here.

Indeed, Trump has already vocalized his policy intentions throughout the campaign trail and his flurry of executive orders proved that he meant business. One particular policy was spelled out in unambiguous terms: drill, baby, drill. With such an obvious catalyst, investors shouldn’t overthink things. It’s time to seriously consider buying independent hydrocarbon exploration specialist Devon Energy (NYSE:DVN).

For one thing, Trump’s support of fossil fuels effectively extends Devon’s lease on life. Rather than domestic upstream projects taking a backseat to alternative energy solutions, the old guard is once again at the helm. Therefore, the consensus view that Devon will reach $45.71 billion in sales for fiscal 2025 may be understated. It wouldn’t be surprising to see the high-end estimate of $47.7 billion ultimately be the end result.

Second and just as importantly, the hydrocarbon sector’s main rival — green and renewable energy infrastructures — has been struggling under the new paradigm. From publicly traded manufacturers of electric vehicles to solar panel and technology specialists, the next generation of energy solutions has suddenly found itself shoved to the back of the line.

It’s terribly cynical but the competition just got kicked where it hurts. Investors have every reason to take advantage of the situation.

Statistical Trends Favor a Bullish Mindset

Another reason to consider acquiring shares of DVN stock at this juncture is the underlying statistical framework. From a purely stochastic perspective — meaning devoid of any other context aside from the temporal — DVN enjoys an upward bias.

Using data over the past five years, there is a 53.41% chance that a position held at the beginning of any given week will rise in value by the end of it. During these positive outcomes, the median return lands at 3.99% (which is quite high). However, during the 46.59% of the time when the return is negative, the median loss is 4.13%.

Put another way, while the bulls have the edge in terms of likelihood of success, on a week-to-week basis, when circumstances go bearish, the magnitude of loss is greater than the magnitude of reward. Fortunately, over time, this trend also migrates to the bullish side of the spectrum.

On a two-week basis, investors have a 50.19% chance of a positive return, with the median return being 6.52% while the median loss lands at 5.3%. For three weeks, the profitability odds rise to 53.26%, with the median return clocking in at 7.1% and the median loss slipping to 6.69%. Finally, for four weeks, the odds are 52.49%, with a median return of 9.33% and a median loss of 7.35%.

In short, momentum skews bullishly over time. Armed with a politically favorable framework, investors have more reason to believe in DVN stock than to be skeptical. Therefore, a long position appears to be a reasonable solution.

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