Analyst Action: These Resource Stocks Are On Watch!

| August 11, 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…

Valero Energy (VLO)- The large-cap refiner had their “outperform” rating reiterated at Oppenheimer. Analysts have a $65 price target, which is a 30% premium to current prices.

Sandridge Energy (SD)- The Mississippian shale producer plummeted last week after reporting a 27% decline in second quarter revenue versus the same period last year. Not surprisingly, the company received ratings downgrades from Global Hunter and Citigroup. Both firms have a “neutral” rating on SD.

Pioneer Natural Resources (PXD)- After slumping from $230 to $205 in recent trading, Societe Generale raised their price target on the top-tier oil and gas producer to $220. What’s more, RBC Capital boosted their PXD price target to $232.

Oasis Petroleum (OAS)- Like many in the exploration and production space, OAS took a hefty dive last week. However, analysts at Raymond James reiterated their “strong buy” rating and $65 price target on OAS last Thursday. Following in Raymond James’ footsteps, KLR Group moved the company from “accumulate” to “buy”.

Diamondback Energy (FANG)- Raymond James reiterated their “outperform” rating and $110 price target on this quickly growing Permian Basin producer. Howard Weil followed suit by raising their price target to $104. With shares crossing the tape at $77, Raymond James’ price target represents 42% profit potential.

And last, but certainly not least…

Cimarex Energy (XEC)- Howard Weil and KLR Group are very bullish on XEC. In fact, Howard Weil reiterated their “sector outperform” rating and raised their price target from $182 to $211 last week. With shares currently trading in the $136 range, Weil’s price target represents remarkable 55% upside potential.

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.

Subscribers saw a 105% gain in Noble Energy (NBL) last Monday!

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.