Is Devon Energy Corporation (DVN) Among the Top Commodity Producers With the Highest Upside Potential?
On the other hand, Morgan Stanley, on February 21, highlighted that 2025 is anticipated to be a crucial year for commodity markets, influenced by supply fundamentals, inflation patterns, and dollar fluctuations. Inflation in the United States is still high, falling short of the Federal Reserve's 2% target in December with headline CPI readings of 2.9% and core CPI readings of 3.2%. After the U.S. presidential election, policy changes—particularly related to immigration, deficits, and tariffs—have raised inflation expectations. According to data from the University of Michigan, they rose from 2.8% to 3.3% in just one month. Commodity prices have generally been supported by these conditions.
'Commodity prices have whipsawed throughout the 2020s—plummeting with arrival of the COVID-19 pandemic, then surging to record highs after Russia's invasion of Ukraine, and then sinking again,' said Ayhan Kose, the World Bank Group's Deputy Chief Economist and Director of the Prospects Group. 'In an era of geopolitical tensions, surging demand for critical minerals, and more frequent natural disasters, that could become the new normal. Successfully navigating through repeated commodity prices swings will require developing economies to build fiscal space, strengthen their institutions, and improve investment climates to facilitate job creation.'
However, the World Bank's April 2025 Commodity Markets Outlook projects that global commodity prices will plummet, falling 12% in 2025 and further 5% in 2026 to their lowest level since 2020. The anticipated drop is being driven by slowing global economic growth and persistently high oil supply. This decline carries risks to economic growth in developing countries, with two-thirds likely to see setbacks, even though it may reduce short-term price pressures associated with rising trade barriers. Notwithstanding the drop, nominal prices will still be higher than they were before the pandemic.
The commodity market is booming. According to a research report, the size of the global commodity services market was projected at $3.56 billion in 2024 and is anticipated to grow at a compound annual growth rate (CAGR) of 8.65% from 2025 to 2034, from $3.87 billion in 2025 to roughly $8.16 billion by 2034. Regionally, the commodity services industry is dominated by North America, while Asia Pacific is projected to grow at a quick pace.
Commodity producer stocks are shares of publicly listed firms that produce, explore, or distribute commodities. These businesses are frequently interested in metals, mining, agriculture, and energy. Commodity producer stocks are chosen by investors to obtain exposure to both the equity and commodities markets, potentially profiting from heightened interest in either.
We recently compiled a list of the Top 15 Commodity Producers With the Highest Upside Potential . In this article, we are going to take a look at where Devon Energy Corporation (NYSE:DVN) stands against the other Commodity Producer stocks.
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Since late September, the U.S. dollar has risen by almost 8%, in part because of growing interest rates and policy expectations. Global demand for commodities is usually pressured by a strong dollar, but if the currency stabilizes or depreciates, it may eliminate a significant obstacle. Although recent contango suggests sufficient short-term supply, a yield-adjusted perspective reveals markets in backwardation at about 4%, showing ongoing physical tightness. This suggests that inventories for essential commodities remain low, making the market more susceptible to demand shocks. Commodity performance in 2025 is supported by tight supply, high inflation, as well as potential dollar weakness.
Top 15 Commodity Producers With the Highest Upside Potential
A group of technicians in hazmat suits inspecting a natural gas storage tank.
Our Methodology
To collect data for this article, we examined companies operating in the commodity sector and then compiled a list of the stocks with the highest upside potential according to Wall Street analysts, as of May 1, 2025. To keep our list relevant, we have only included companies with a market cap of $10 billion and above. The following are the Commodity Producers with the Highest Upside Potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
Devon Energy Corporation (NYSE:DVN)
Analysts' Upside Potential as of May 01: 40.37%
Devon Energy Corporation (NYSE:DVN) is an oil and gas company that owns land in a number of the best shale plays in the United States. Although the Permian Basin accounts for around two-thirds of its production, the Anadarko, Eagle Ford, and Bakken basins each produce a significant amount of it. The firm's net proved reserves were 2.2 billion barrels of oil equivalent as of the end of 2024. In 2024, net production averaged around 848,000 barrels of oil equivalent per day, with 73% oil and gas liquids and 27% natural gas. It is among the Best Commodity Stocks.
In Q4 2024, Devon Energy Corporation (NYSE:DVN) exceeded projections with an adjusted EPS of $1.16, which was more than the $1 estimate. The company's revenue also surpassed projections by $155.3 million, rising 6.22% year over year to $4.4 billion. The Williston Basin business, which the oil and gas company purchased from Grayson Mill Energy in a $5 billion agreement, saw its output soar 28% YoY to 848,000 boe/d during the quarter, which was the main driver of the strong performance.
Devon Energy Corporation (NYSE:DVN) generated $3 billion in free cash flow in 2024 and maintains a solid balance sheet despite the acquisition. The company just increased its quarterly dividend by 9.1% to $0.24 per share and gave $2 billion back to its shareholders. By 2025, DVN expects to generate free cash flow at current strip pricing and pay out up to 70% of the cash return to shareholders.
Overall, DVN ranks 4th on our list of the Top Commodity Producers With the Highest Upside Potential. While we acknowledge the potential of DVN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than DVN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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