Since April 2021, the S&P 500 has delivered a total return of 57.8%. But one standout stock has more than doubled the market - over the past five years, Northern Oil and Gas has surged 122% to $29.12 per share. Its momentum hasn’t stopped as it’s also gained 18.1% in the last six months, beating the S&P by 23.6%.

Is now still a good time to buy NOG? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.

Why Are We Positive On Northern Oil and Gas?

Taking the path less traveled in the oil industry by choosing not to operate its own wells, Northern Oil and Gas (NYSE: NOG) acquires minority stakes in oil and gas wells operated by other companies across major U.S. shale basins.

1. Skyrocketing Revenue Shows Strong Momentum

Cyclical industries such as Energy can make mediocre companies look great for a time, but a long-term view reveals which businesses can actually withstand and adapt to changing conditions. Thankfully, Northern Oil and Gas’s 35% annualized revenue growth over the last five years was incredible. Its growth beat the average energy upstream and integrated energy company and shows its offerings resonate with customers.

2. Elite Gross Margin Powers Best-In-Class Business Model

In any given year, energy gross margins are heavily influenced by prices, hedging, and cost inflation, but over a full cycle these gross margins reveal which producers are structurally advantaged through superior “rock” quality, infrastructure access, and cost position.

Northern Oil and Gas, which averaged 81% gross margin over the last five years, exhibits enviable unit economics in the sector. It means the company will remain profitable at lower commodity prices than peers with inferior gross margins and serves as an advantaged starting point for ultimate operating profits and free cash flow generation.

3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Northern Oil and Gas has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the energy upstream and integrated energy sector, averaging 25.6% over the last five years.

Final Judgment

These are just a few reasons why Northern Oil and Gas is one of the best energy upstream and integrated energy companies out there, and with its shares topping the market in recent months, the stock trades at 8.9× forward P/E (or $29.12 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

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