|New Threads Only:|
|New Threads & Replies:|
Forum List » Guru News and Commentaries|
Guru News, Stock picks and commentaries
Why You Should Buy EQT During an Oil & Gas Exploration and Production Flush
Posted by: Dave and Donald Moenning (IP Logged)
Date: October 23, 2013 05:03PM
Wednesday's market action hasn't been very good, though citing "liquidity concerns from China" as the primary driver of a 12 point drop on the S&P 500 in the first half-hour of trading isn't exactly a compelling cause for major concern.
Nevertheless, when the "necessary pullback" during bull runs does happen, certain spaces get slammed. Wednesday, it looks like Semiconductors and Oil & Gas Exploration & Production are the sub-industries taking a beating. While it's probably not the greatest strategy to pick out buys in problem areas, EQT Corp (EQT) presents itself as a great buy this morning.
First, take a quick look at other Oil & Gas Exploration & Production stocks on a daily chart, just to get an idea of what's happening in the space today: FANG, BCEI, GPOR, EPL, XEC. They all elicit the same reaction: "Ouch!"
Now take a look at EQT, and suddenly it looks like we're dealing with a steady Staples stock. Buyers have stepped in this morning, and currently EQT is the best performing stock in the entire sub-industry.
EQT has been a "buy" ever since it held the $85 support level in the second week of October. After pulling back from weekly highs of $92.75 in mid-September, the stock pulled back to the $85 area over the next three weeks and quickly bounced higher, maintaining its positive trending and comfortable technical set-up.
Today's price action is even more encouraging. Despite residing in a sub-industry that is getting crushed this week, EQT has held up extremely well, and there has been some positive buy-side action on healthy volume this morning. Oil & Gas is one of those spaces that pulls back violently for a few days, then turns on a dime. Given the recent action, EQT should be able to hold the $85 price level while traders hammer this "rotation" move.
Even at current prices, EQT is an attractive buy as it hovers above its 50-day moving average. Thus, today's pullback in the space can be viewed as more of an "opportunity" or "discount" rather than a legitimate concern.
So, with a stop at the $85 area that recently held, and prospects for a move back to the mid-$90's, EQT is today's most compelling buy. Oil & Gas may not be a great space to play at the moment, but a good mantra to trade by is to "own the best and ignore the rest!" Below are some comparative charts showing EQT's relative out-performance of FANG (what a lot of Oil & Gas Exploration & Production stocks look like), just to visually show the ideas.
When to Consider Entering the Trade:
Buy at the current price (~$87.98).
When to Consider Exiting the Trade:
At a close below $85.22 (Breakdown) / A close above $91.41 (Profit-Taking)
Disclosure: At the time of publication the editor and affiliated companies own the following positions: EQT
Note: Positions may be bought or sold while this publication is in circulation without notice.
EQT Corp - Last 30 Days
EQT Corp - Last 3 Months
EQT Corp - Last 6 Months
Mr. David Moenning is a full-time professional money manager and is the President and Chief Investment Strategist at Heritage Capital Management. He focuses on stock market risk management, stock analysis, stock trading, market news and research. Click here to claim a free copy of Dave's Special Report on changes in the current market.
Stocks Discussed: BCEI, EPL, EQT, FANG, GPOR, XEC,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.