The dynamic in play for energy stocks is making way for some solid swing trades
Oil and gas stocks are on the move on Wednesday thanks to a rebound in crude prices on a smaller-than-expected inventory build.
Never mind that U.S. shale production has pushed output to 14-month highs. Or that overall U.S. crude inventories have soared to record levels. A modicum of good news on the supply side was all it took to drive energy prices higher as hedge funds and other institutional traders jump in.
A similar dynamic is in play in energy stocks, which of which have been drifting lower in recent months on growing apprehension about OPEC’s supply freeze agreement late last year. The latest is that the oil sheiks are looking to extend that agreement despite a loss of market share as U.S. producers ramp up in response to the recent recovery in oil prices.
Some of this feels like a short-covering squeeze, given the medium-term headwinds facing oil and energy stocks. But that doesn’t mean there aren’t some good swing trade candidates here for a quick long play.
Here are five stocks worth a look:
Energy Stocks to Buy: Suncor Energy (SU)
Suncor Energy Inc. (USA) (NYSE:SU) shares are bursting up and out of a four-month downtrend, crossing over its 50-day moving average for the first time since February. Support near the $30-a-share level held corresponding to the 200-week moving average.
Although shares are up 75% from their February 2016 low, a return to the 2014 highs near $40 would still be worth a near 30% gain from here.The company will next report results on May 10 after the close. Analysts are looking for earnings of 23 cents per share on revenues of $6.35 billion.
Energy Stocks to Buy: Cabot Oil & Gas (COG)
Cabot Oil & Gas Corporation (NYSE:COG) shares are challenging resistance near $24.50 that turned the bulls around back in December and again in February.
After rising some 80% from the February 2016 low, COG has ambled in a sideways pattern since last summer. A return to the high set in September would be worth a 10%-plus gain from here.
The company will next report results on May 26 before the bell. Analysts are looking for earnings of 17 cents per share on revenues of $483.25 million.
Energy Stocks to Buy: EnCana (ECA)
Encana Corp (USA) (NYSE:ECA) shares have retaken their 50-day moving average after bouncing off of support at the 200-day moving average. After rising some 367% off of its February 2016 low, shares have idled since October as the market has digested the OPEC supply freeze deal.
Merely a return to the late January high would be worth a 13% gain from here. The company will next report results on May 18 before the bell. Analysts are looking for earnings of six cents per share on revenues of $788.07 million.
Energy Stocks to Buy: WPX Energy (WPX)
WPX Energy Inc (NYSE:WPX) shares have crossed back over their 50-day moving average for the first time since January thanks, in part, to an upgrade last week from analysts at UBS.
After more than tripling off of the early 2016 lows, WPX shares have stalled since last September after hitting resistance from the early 2015 trading range.
With crude oil potentially preparing an upside flourish, watch for a run at the December high for a gain of 20%-plus from here. The company is expected to report a loss of 18 cents per share on revenues of $288.87 million on May 24 after the bell.
Energy Stocks to Buy: BP (BP)
BP plc (ADR) (NYSE:BP) shares look ready to break up and over their 50-day moving average, something that last happened back in December, after stabilizing near their 200-day moving average over the last two months.
Stepping back, shares have been consolidating near current levels since last summer. Watch for another attempt at $38, a double-top resistance level going back to early 2015.
The company will next report results on May 9 before the bell. Analysts are looking for earnings of 38 cents per share on revenues of $53.47 billion.
Note: The author of this article is Anthony Mirhaydari. He is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters.
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