Not long ago, InvestorPlace contributor Josh Enomoto put Sitio Royalties (NYSE:STR) on his list of seven short-squeeze stocks to buy before they soar. All seven of them look promising, but STR stock really caught my eye. There’s definitely short-squeeze potential here, and this should pique the interest of short-term traders. However, there are also reasons to invest in Sitio Royalties for the rest of 2023 — and perhaps even for years.
Hailing from Colorado, Sitio Royalties owns and manages oil-and-gas mineral and royalty interests in North America. These assets are spread across the famous Permian Basin in Texas, as well as the Anadarko Basin, Williston Basin and other locations.
It’s fine if you want to take a share position in Sitio Royalties because Reddit traders might pump up the price. After learning more about the company, however, you may end up holding your position and not wanting to let it go.
What’s Happening With STR Stock?
STR stock has been on a steady uptrend since October of 2020 but recently pulled back below $30. Therefore, dip-buyers might want to grab a few shares in hopes of a short-term rebound.
Meanwhile, Sitio Royalties could soon be a target of the short-squeeze crowd. Reddit traders seem to prefer companies that are not too big and not too small. Sitio Royalties fits into that space nicely with its $4 billion market capitalization.
MarketBeat and ShortSqueeze both confirm that STR stock has a short percent of float of 30.74%, which is fairly high. Furthermore, Sitio Royalties’ short-interest ratio stands at just 6.7 days to cover. This suggests that the short sellers could exit their positions in haste if there’s a rally in the Sitio share price.
Invest in Sitio Royalties for Dividends and Ambitious Oil Production
Thus, there’s a solid argument to hold STR stock as a short-squeeze candidate. Yet, income-focused investors should also put Sitio Royalties on their watchlists.
For one thing, Sitio Royalties pays a generous 10.4% annual dividend yield. Additionally, value hunters should observe that Sitio Royalties’ price-to-earnings (P/E) ratio is quite reasonable, at 12.2x.
Moreover, you’ll undoubtedly be impressed with Sitio Royalties’ production volume. In 2022’s third quarter, Sitio achieved average daily production volume of 17,990 barrels of oil equivalent per day (Boe/d), up 45% quarter-over-quarter.
The company could almost double that production rate, however. Guiding for the 12 months ending June 30, 2023, Sitio Royalties anticipates achieving average daily production of 32,750 to 34,250 Boe/d.
What You Can Do Now
Enomoto is right to place Sitio Royalties on his list of short-squeeze candidates. There could be a share-price rally any day now, based on short sellers frantically covering their positions.
There are also reasons to buy and hold STR stock, though. Sitio Royalties pays a healthy dividend, and the company’s shares don’t appear to be overpriced at all.
Finally, investors should consider Sitio Royalties for its ambitious petroleum production rate. All in all, whether you’re in the trade for a quick flip or plan to stay for the long haul, Sitio Royalties deserves a prominent position on your watchlist right now.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.