WPX Energy (NYSE: WPX) is an orphan stock; has been one ever since it was spun off by Williams (NYSE: WMB) three years ago just ahead of a crash in natural gas prices.

Then came the writedowns and management turmoil. By the time an outsider finally landed in the corner suite earlier this year, this had become a stock only a hedge fund could love. And that’s not a demographic generally known for its patience.

After the stock ran to a record high above $26 by the end of August came the cliff dive, so that now WPX finds itself at little more than $16, lower than its price at independence.

Which is very, very lucky for us. We’d recommended WPX at $18.42 in August of 2013 and suggested selling half of your initial stake at $21.60 eight months later. So even with the recent implosion, anyone who followed our lead is still modestly in the black on the investment. Better still, for those with cash to put to work, WPX is now a proposition with modest downside and huge potential rewards.

We’re now recommending a return to a full position and calling WPX our #7 Best Buy, ahead of much more acclaimed top picks such as Enterprise Products Partners (NYSE: EPD) and Devon Energy (NYSE: DVN).

The reason we’re as bullish on WPX as on any other stock in our portfolio is its recent transformation from a challenged gas producer to a fast growing crude driller. Sure oil prices are in a painful slump right now, but for all but a handful of energy companies crude remains much more profitable than natural gas, as WPX’s numbers demonstrate.

Source: WPX presentation

The company recently reported that its overall production on an energy-equivalent basis was down 3% year-over-year (and up 5% after adjusting for asset sales). Yet its operating cash flow jumped 50% over the same time frame. Why? Because domestic crude output has soared 52%. Oil is so much more profitable than dry gas that, while crude and natural gas liquids (NGL) together accounted for 26% of domestic output on an energy-equivalent basis, they delivered 56% of domestic revenue.

Leading the charge have been WPX’s wells in the Bakken, which according to the company have on average far outperformed the average of comparable wells drilled by any other producer in the play over the last two years. WPX’s oil output in the Williston basin, which includes the Bakken, is up 44% year-over-year. At $80/bbl crude, the company would be generating internal rates of return of 23% to 39% in Williston right now, and these should rise given rapidly declining unit costs and the recent successful experimentation with higher-pressure completions, which appear to be stimulating a lot of additional early production.

Source: WPX presentation

The other ace up WPX’s sleeve is its Gallup play in New Mexico, in the San Juan basin where it has long drilled for gas but has lately found crude offering 50%+ returns that beat all of its other prospects. Gallup production was recently up 255% from a small base year-over-year, and management thinks rates of return could double to 100% with longer laterals even if crude prices don’t rebound much.

Meanwhile, WPX is still deriving nearly half its revenue from the Piceance basin gas fields in Colorado, were it remains the leading and the lowest-cost producer. A millstone commitment to ship gas east from Colorado at below-market rates has just expired, permitting the company to enter the more lucrative gas markets to the west and to immediately save $100 million annually. WPX plans to reduce its spending here to 20% of next year’s capital budget, devoting the rest to the Williston and the Gallup.

To finance its crude drilling push, WPX has previously sold some low-decline Piceance properties to a master limited partnership, and there’s more where that came from for the pricey upstream MLPs uncomfortably reliant on crude right now. More recently, the company also sold its South American operations, and WPX’s untapped Appalachian acreage is now on the block as well.

Source: WPX presentation

New CEO Rick Muncrief is concentrating his capital not only on the highest-return crude prospects but those he happens to know best, having spent much of his career as an operations executive in the Rockies with Burlington Resources, ConocoPhillips (NYSE: COP) and Continental Resources (NYSE: CLR). That’s a great pedigree, and the early returns in terms of production and asset sales look promising as well.

I’m not sure about WPX’s recently unveiled ambitious goals of tripling margins and quintupling domestic oil production from 2013 levels over the next five years. But its plan to triple its market cap over the same span looks plausible in the right oil market (like that which was around just three months ago) and it might only take a year or two to double the share price from current levels.

As for the downside, WPX is priced, as Robert Rapier notes elsewhere, at the discounted current value of its proved reserves, and its enterprise value (market cap plus debt) multiple at roughly five times next year’s likely adjusted earnings (EBITDA) is not at all demanding either. WPX has half of next year’s likely oil output hedged at nearly $95/bbl, and half of its natural gas at $4.26 per million British thermal units.

With more asset sales on the way and places to deploy the extra cash for excellent returns, the future looks brighter than it ever has in the company’s short history. Buy WPX below $21.