Analyst Action: These Resource Stocks Are On Watch!

| July 11, 2014 | 0 Comments

stock analystIt’s Friday, and that means it’s time for another edition of Analyst Action.

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 many times a notable bullish change in a respected analyst’s outlook can be the start of great things for a company’s share price.

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

When an analyst applies a big downgrade, a company’s share price 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 this week’s natural resource company ratings changes catching my eye…

Apache (APA)- Analysts at Barclay’s raised the international oil producer to “overweight” with a price target of $130. With shares currently trading in the $99 range, that represents 30% upside profit potential.

Whiting Petroleum (WLL)- The Bakken, Niobrara, and Permian producer is now a “focus stock” at Howard Weil. The company’s price target was raised to $110, which is 37% higher than current prices.

Continental Resources (CLR)- Analysts at Howard Weil also moved this Bakken and Niobrara producer to “sector perform” with a $179 price target- a 17% premium to current prices.

Schlumberger Limited (SLB)- The oil services heavyweight was moved to “overweight” at HSBC. Analysts believe SLB should trade at a $135 handle, which is an 18% premium to current prices.

Bonanza Creek Energy (BCEI)- The Wattenberg producer’s price target was raised to $74 at Suntrust- a 27% premium to current prices.

Alcoa (AA)- After the company reported strong quarterly results, analysts at Morgan Stanley moved the aluminum producer to “overweight”.

AuRico Gold (AUQ)- Canaccord Genuity analysts downgraded the Canadian gold producer to “hold” with a $5 price target.

Eldorado Gold (EGO)- After surging 23% in the past month, analysts at Canaccord also downgraded this Canadian gold producer to a “hold”. However, the price target for the company remains at $9, which is 18% above current prices.

Devon Energy (DVN)- After surging 28% in the past six months, Citigroup analysts still believe this oil and gas producer is undervalued by 25%. They upgraded the company to buy with a $96 price target.

Bill Barrett (BBG)- The oil and gas producer, whose operational focus lies in Wyoming, Utah, and Colorado, had their price target upped to $37 at Suntrust. The new target represents a 42% premium to current prices.

And last, but certainly not least…

Northern Oil and Gas (NOG)-

The Bakken focused explorer had their price target upped to $24 at Howard Weil with an “outperform” rating. With shares trading in the $16 range, the upgrade represents a nearly 50% premium to current prices.

There you have it…

As you can see, analysts made some substantial ratings changes this week. The share prices of many of the natural resource companies above are already reacting to the 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.