Is TPL a good stock to buy? We came across a bullish thesis on Texas Pacific Land Corporation on 41investments’s Substack. In this article, we will summarize the bulls’ thesis on TPL. Texas Pacific Land Corporation’s share was trading at $432.83 as of May 4th. TPL’s trailing and forward P/E were 62.21 and 42.37 respectively according to Yahoo Finance.
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Texas Pacific Land Corporation engages in the land and resource management, and water services and operations businesses. TPL is presented as a uniquely positioned land royalty company operating in the Permian Basin and represents one of the most compelling long-term compounders in the energy infrastructure space, with its asset base rooted in a historic railroad land grant that evolved into approximately 882,000 acres of highly strategic oil, gas, and water-rich land.
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This structure allows Texas Pacific Land to operate without the capital intensity of traditional E&P firms, instead monetizing production through royalties while benefiting from minimal operating costs and no debt, resulting in extraordinary profitability and free cash flow conversion that consistently ranks among the highest in the sector.
The company’s economics are further enhanced by its underappreciated water services segment, which supports fracking operations and is becoming increasingly important as drilling activity in the Permian Basin remains structurally significant, while TPL also benefits indirectly from higher oil prices that amplify royalty revenue per barrel.
Recent years have shown significant volatility, with 2024 delivering a 127% stock surge driven by water royalty optimism, followed by a 2025 correction of around 20% amid lower oil prices, declining rig counts, and stretched valuations, yet this volatility has not impaired the underlying asset strength or long-term cash generation potential.
The outlook for Texas Pacific Land has been further strengthened by emerging AI-driven demand, including partnerships linked to data center development in West Texas, where the company’s land, energy access, and critical water resources position it as a potential beneficiary of hyperscaler expansion and AI infrastructure buildout upside.
Previously, we covered a bullish thesis on Texas Pacific Land Corporation (TPL) by Six Bravo in December 2024, which highlighted strategic acreage acquisitions, strong water royalty growth, and S&P 500 inclusion-driven volatility. TPL’s stock price has appreciated by approximately 7.22% since our coverage. 41investments shares a similar view but emphasizes structural royalty-driven compounding and emerging AI data center demand as a key incremental upside driver.
Texas Pacific Land Corporation is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held TPL at the end of the fourth quarter which was 31 in the previous quarter. While we acknowledge the risk and potential of TPL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TPL and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
