Analyst Action: These Resource Stocks Are On Watch!

| October 13, 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… 

Parsley Energy (PE)-  This recently IPO’d Permian producer was upgraded to “outperform” at Macquarie with a $27 price target.  With shares trading at $18.25 this morning, the target represents 47% upside profit potential.

EOG Resources (EOG)-  Despite the hefty downdraft in this international oil and gas producer’s shares, Macquarie upgraded EOG to “outperform” with a $120 price target.

Not to be left out, Barclays followed suit with an “overweight” rating and $130 price target.  With EOG crossing the tape at $87 this morning, these profit targets are at least a 37% premium to current prices.

Helmerich & Payne (HP)-  The large-cap oil services provider’s “outperform” rating  and $106 price target was reiterated at Zacks.  With shares plummeting to $82 in recent trading, Zacks’ target represents 30% profit potential.

National Oilwell Varco (NOV)-  Analysts at HSBC downgraded the international oil services company to “neutral” with an $80 price target.

Sanchez Energy (SN)- The Eagle Ford and Tuscaloosa Marine Shale operator was upgraded to “outperform” with a $42 price target at Macquarie.   Thanks to the dramatic downturn in the entire exploration and production space over the past few weeks, SN is trading at $19 this morning- a whopping 54% discount to Macquarie’s target.

And last, but certainly not least…

Magnum Hunter (MHR)- Analysts at Keycorp reiterated their “buy” rating and $8 price target on this quickly growing Utica/ Marcellus natural gas producer.  With shares trading at $4 this morning, Keycorp’s target represents 100% upside!

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

***Disclosure*** Editor Justin Bennett holds shares of Magnum Hunter (MHR).

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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.

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