Analyst Action: These Resource Stocks Are On Watch!

| September 3, 2014 | 0 Comments

Analyst ActionSince Monday was a market holiday, we missed our regularly scheduled Analyst Action report. Let’s get back into the swing of things with the most recent upgrades/downgrades from the past few days!

Remember, analysts at the biggest banks and investment firms on Wall Street provide research on a multitude of natural resource companies. It’s not always the case, but most times a notable bullish change in a respected analyst’s outlook can have a significant influence on a company’s share price.

Of course, their ratings changes aren’t always positive…

When an analyst applies a big downgrade, shares can lose ground quickly.

After all, it’s not a great idea to be fully invested in a company that’s falling out of favor with Wall Street. At the very least, a downgrade can slow buying activity, which opens the door to lower prices.

Either way, it’s important to keep an eye on the analyst activity. Doing so can give you a substantial leg up on the market.

Here are a few recent natural resource company ratings changes that caught my eye…

Magnum Hunter (MHR)- Analysts at KLR Group initiated this Utica/Marcellus natural gas producer at a “Hold” with a $6 price target, which is slightly below current prices.

I disagree with KLR’s call. MHR is on track to nearly double production in the Utica/Marcellus by year-end. What’s more, the company is expected to sell its Bakken assets to pay down debt in the near future.

SandRidge Energy (SD)- After losing 45% of its market cap since mid-June, analysts at Stifel Nicolaus moved the Mississippian producer to “Buy” with a $6.75 price target- a 30% premium to current prices.

Parker Drilling (PKD)- This small-cap oil services provider was upgraded to “Buy” with a $9 price target at Standpoint Research. With shares currently trading at $6.73, Standpoint’s target represents 33% profit potential.

Cabot Oil & Gas (COG)- Analysts at Stifel Nicolaus upgraded this Marcellus/Eagle Ford explorer to “Buy” with a $39 price target, which is an 18% premium to current prices.

And last, but certainly not least…

Athlon Energy (ATHL)- The Permian Basin producer was initiated with an “Overweight” rating and $58 price target at Barclays late last week. What’s more, Topeka Capital Markets boosted their ATHL price target from $60 to $64 this morning- a 42% premium to current prices.

There you have it…

What you see above are the most captivating, and potentially profitable, ratings changes I came across over the past few days. Shares prices may already be reacting to the ratings and price target adjustments.

Now remember…

Just because an analyst has a bullish view on a company doesn’t mean you should dump all your money into the company’s stock. Do your own due diligence and always use correct position sizing and risk control measures in your trades.

If you’d like me to do the work for you, check out the Options Profit Pipeline. This one-of-a-kind options service focuses specifically on commodities and the companies producing them.

Until Next Time,

Justin Bennett

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Category: Natural Resource Stocks

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.