This morning the Santos Ltd (ASX: STO) share price raced higher and reached a 52-week high of $4.69.
This brought the energy company's three-month return to over 40%.
Is it too late to invest?
While Santos is no longer the bargain buy it was three months ago, I still see a lot of value in its shares today, especially given the current outlook for oil prices.
Thanks largely to OPEC and Russia's production cuts, Brent crude oil is at two-year high of US$62.07 and could yet climb higher if these cuts are renewed next year.
That would put Santos in a great position to deliver high levels of free cash flow in the future.
Earlier this year the company advised that it has reduced costs to the point that it is free cash flow breakeven with an oil price of US$33 a barrel.
I expect that such high levels of free cash flow would allow Santos to pay down debt and even consider restarting it dividend which it suspended in 2016.
In my opinion, this makes it one of the best options for investors looking to gain exposure to the resources sector and I would choose it ahead of rivals Woodside Petroleum Limited (ASX: WPL) and Oil Search Limited (ASX: OSH).
Overall, I would suggest investors look to buy on any dips that are presented in the coming weeks.
