Analyst Action: These Resource Stocks Are On Watch!

| September 29, 2014 | 0 Comments

Analyst ActionIt’s Monday, and that means it’s time for a look at compelling analyst upgrades and downgrades.

In case you’re unaware, 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 last week’s natural resource company ratings changes that caught my eye… 

Marathon Petroleum (MPC)- The refiner and pipeline operator was initiated with an “overweight” rating and $107 price target at JP Morgan Chase. With shares crossing the tape at $85, JP Morgan’s target represents 25% upside profit potential.

Phillips 66 (PSX)- Here’s another refiner getting an “overweight” rating from JP Morgan Chase. Analysts at the highly respected bank set a $101 price target on PSX, which is a 23% premium to current prices.

Spectra Energy Partners (SEP)- Zacks analysts upgraded the oil and gas pipeline operator to “outperform” with a $58 price target- an 11% premium to current prices.

Hi-Crush Partners (HCLP)- Here’s another fracking sand supplier getting Wall Streets’ attention. Thanks to a recent pullback, analysts at Wunderlich moved HCLP shares to a “buy” with a $66 price target. The upgrade comes on the heels of a Goldman Sachs’ “buy” rating on Emerge Energy Services (EMES), another sand supplier, the previous week.

Occidental Petroleum (OXY)- Bank of America put this international oil and gas producer on their US1 list. As you may know, the US1 list is reserved for a short list of companies the bank holds in very high regard.

Bank of America has the highest OXY price target on the Street at $130.

Cabot Oil & Gas (COG)- The Marcellus and Eagle Ford shale was upped to “buy” from “accumulate” at KLR Group. The firm also increased COG’s price target from $42 to $44- a 37% premium to current prices.

And last, but certainly not least…

Gastar Exploration (GST)- This small-cap Marcellus gas producer had their “buy” rating reiterated at Canaccord Genuity. However, analysts reduced their price target from $12 to $11. But that’s still an 83% 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.