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I
want to build a mini basket of a few natural gas companies, as I've
done with fertilizer and coal. We first started noticing the relative
strength across this entire sector about a month ago [Feb 11: An Interesting Development in Natural Gas],
but I wanted to do more homework on the group as I have not invested in
any of these names for close to 3 years. I still like coal more due to
its potential to be exported, but it appears as more coal is sent
offshore this has pushed up demand for natural gas.
My main fear of
the natural gas trade is slowing US economy will hurt it, and since it
is not easily transportable like coal can be, it is levered far more to
the domestic situation. That said, the price action in the stocks of
late is hard to argue with, so I am going to begin exposure here and
then watch how things develop.
Of interest are EOG Resources (EOG), Chesapeake Energy (CHK), Cimarex (XEC), Southwestern Energy (SWN),
and a few others. I'll probably stick with 2-3 names and simply have a
group of 5-6 on a watch list, and I am waiting to see which ones hit my
price targets first. I do want EOG, with their recent discoveries, in
the portfolio badly. Today I am beginning with Cabot Oil & Gas (COG),
as it has fallen nicely to its 20 day moving average and is down 9% .
I started with a primer position of 1.2% or 250 shares right
near $49. I would like to expand this position if/when the stock falls
to its 50 day moving average below $46. We'll see if that happens as
these stocks have shown incredible relative strength of late - staying
flat in all this market turmoil.
Most of the
other names have not fallen that much (ex SWN), but I want to buy the
strongest charts when they falter in a general market selloff. Cabot Oil & Gas
is one of those names that provided an opportunity on Monday. (could have bought it for a similar price in past 2 weeks of course, but wanted to see
how this group reacted in the anticipated sell off)
Disclosure: Long Cabot Oil & Gas in fund; no personal position
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This article has 1 comment:
Anyone have some news about Nornew?
Operating in the Marcellus play near Hamilton.
Norway