Viper Energy Inc (NASDAQ:VNOM) Shows Strong Growth and Technical Setup for Potential Breakout

The strategy of identifying strong growth stocks with favorable technical setups combines fundamental strength with timely price action, providing a dual-layered approach to potential investment opportunities. By focusing on companies showing solid earnings growth, healthy financials, and profitability, while also displaying constructive chart patterns, investors aim to capture upside momentum as these stocks move out of consolidation zones. This method reduces risk by confirming underlying business quality while using technical signals for entry timing. Viper Energy Inc (NASDAQ:VNOM) appears as a candidate matching this approach, showing both improving fundamentals and a technical setup indicating potential accumulation.

Fundamental Strengths Supporting Growth

Viper Energy’s fundamental profile matches key growth-investing criteria, as seen in its fundamental analysis report:

• Revenue Growth: The company has achieved a 23.6% compound annual revenue growth rate over recent years, with analysts expecting further growth to 32.8% annually. This places VNOM among the top in its industry for revenue expansion.
• Profitability Metrics: Despite a recent drop in EPS, Viper maintains strong margins, including a 64.7% operating margin (better than 93.8% of oil and gas peers) and a 43.4% profit margin. Its return on equity (14.6%) also ranks above 71% of competitors.
• Financial Health: A current ratio of 8.7 shows strong liquidity, while a manageable debt-to-equity ratio (0.31) suggests balanced leverage. However, the high debt-to-FCF ratio (92.1) is a point to watch.

These metrics highlight Viper’s ability to benefit from its Permian Basin mineral interests, where its royalty-based model produces high-margin cash flows with less operational risk than traditional energy firms.

Technical Setup Signaling Potential Breakout

The technical analysis report shows a stock consolidating after a long downtrend, now displaying signs of stabilization:

• Support Zones: Two key support levels exist at $37.57,$37.64 (reinforced by moving averages) and $36.49,$36.50 (trendline support). These levels could act as downside buffers.
• Reduced Volatility: Recent price action has narrowed within a $36.04,$39.45 range, suggesting potential accumulation. A move above $38.76 (near-term resistance) may trigger momentum.
• Setup Rating: ChartMill gives VNOM a setup rating of 8/10, noting the consolidation’s positive structure despite broader negative trends.

While the long- and short-term trends remain bearish, the mix of fundamental strength and a technical base indicates Viper could be ready for a turnaround if sector sentiment improves.

Linking Back to Growth-Investing Principles

As described in our growth-investing introduction, successful growth stocks need:

1. Growing Target Markets: Viper’s Permian Basin assets are key to U.S. energy production, supported by steady demand.
2. Sustainable Competitive Advantages: Its royalty model offers scalable revenue with low capital spending.
3. Strong Management: As part of Diamondback Energy (FANG), Viper benefits from parent-company expertise.

The technical setup supports these fundamentals by pointing to a possible turning point where improving sentiment could drive price gains.

Explore More Candidates

For investors looking for similar opportunities, our Strong Growth Stocks with Good Technical Setups screen offers additional ideas combining growth metrics with actionable chart patterns.

Disclaimer: This analysis is not investment advice. Conduct thorough research and consider risk tolerance before making investment decisions.