CEA Monthly Issue – June 2015
We’re making a big change today…
For the first time in the history of the Commodity ETF Alert, we’re expanding our coverage universe to natural resource companies!
That’s right, from today forward you’ll receive a monthly trade alert including either a commodity-focused ETF OR a natural resource stock. Of course, both will be carefully chosen to reflect the bullish potential in a certain commodity.
Why make such a change?
Let’s face it, overall commodity performance has been downright lousy for quite some time.
Due to the surging US Dollar, hard assets have been under bearish pressure for the better part of the past year. As a result, it has grown quite challenging to find commodities with substantial bullish profit potential.
To be clear, I don’t expect this trend to last forever.
At some point, the greenback will turn lower and bulls will return to the commodity space en masse.
But until that happens, we’re going to switch gears…
By adding the option to invest in carefully selected natural resource companies, we can drastically improve this service’s profit potential.
Let me give you an example. Even though crude oil is up a mere 5% from where it started this year, there are numerous exploration companies that have gained 25% or more in 2015.
Take Newfield Exploration $NFX, the independent oil and gas producer is up 36% year-to-date. Not to be outdone, Matador Resources $MTDR is up a healthy 38% on the year.
You’ll find similar outperformance in select mining companies…
Despite the fact gold is flat year-to-date, names like Newmont Mining $NEM and Agnico Eagle Mines $AEM are up 29% and 24% in 2015, respectively.
Fact is, there’s ample opportunity for big profits across the landscape of natural resource companies, regardless of what commodity it is they produce!
That’s why we feel the addition of natural resource company coverage to the Commodity ETF Alert is so important.
Adding this extra layer of opportunity gives you, our treasured subscriber, the extra value and profit opportunity you deserve.
So without further ado, let’s get to this month’s trade alert. In it, you’ll find a natural resource company poised for substantial upside in coming months!
Commodity: Natural Gas
First things first…
Before I show you which company has strong bullish potential heading into the latter half of 2015, let’s check back in with natural gas.
After a brief run above $3.00 mmBtu in mid-May, the commodity sank back to the $2.60 area in recent trading. The downturn of the past few weeks was due to a slight cooling trend that entered the Eastern US in late May.
Remember, we’re in the time of year where higher temperatures tend to increase natural gas demand, which typically results in higher prices. Of course, if temperatures cool, the opposite tends to occur.
Here’s the deal…
With the intense heat of Summer just around the corner, demand is expected to remain firm for natural gas, which will give price support to the commodity.
But our best chance at big natural gas gains come in the Fall. That’s when Cheniere Energy $LNG is expected to start exporting the commodity to overseas markets.
This extra source of demand, mixed with prices near multi-year lows, has the potential to drastically improve investor sentiment toward natural gas. As a result, the commodity will likely enter a prolonged bullish phase.
How do we capitalize off this situation?
As you know, we already have a bullish position in the US Natural Gas Fund $UNG. The commodity ETF trades lockstep with the price of natural gas.
But the following company offers us another way to profit…
Chesapeake Energy $CHK is one of the largest natural gas producers in the US. The Oklahoma based company has drilling operations is six US states and sports some of the lowest finding and development costs in the natural gas exploration industry.
But the best part is, $CHK has a stable balance sheet along with a cash hoard of nearly $3 billion. Given the challenging industry conditions, it’s important to have plenty of cash on hand!
Now, looking at a chart you’ll find $CHK shares are trading at 52-week lows near $13.20. Clearly, investors aren’t all that interested in the company with the price of natural gas in the dumps.
But there’s a silver lining to this downturn…
We’re getting an opportunity to own this natural gas industry leader at a deep discount. Shares are currently trading below book value and at 50% of sales.
Folks, when natural gas trades meaningfully higher, $CHK is virtually guaranteed to follow suit!
Technically Speaking:
As you can see, $CHK is trading in a rather steep downtrend. But given the value, along with the exposure to natural gas prices, Chesapeake Energy is a solid buying opportunity right now!
WHAT TO DO NOW:
Chesapeake Energy $CHK is trading at $13.07
Buy $CHK up to $13.20 per share
Our profit target is $18.00 or more
Risk Control Price is $11.88 (or a 10% stop loss from your entry point)
Category: Commodity Trading
