Patience Can Pay Off in EnCana

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EnCana Corp. (NYSE:ECA) – This North American energy producer is one of the largest natural gas producers in the world. Its operations are entirely in Canada and the U.S., and include the transportation and marketing of natural gas, oil and natural gas liquids. Its systems are very cost-efficient, and thus EnCana is able to be profitable even when natural gas prices fall below $2, like they did at the beginning of this year. As the economy converts to the use of clean natural gas as an energy source, ECA should be a prime beneficiary of the increased demand. ECA pays a dividend of 80 cents, good for a yield of 3.62%.

Technically, the stock broke from a bear market in January while forming a huge saucer formation. Last week, the 50-day moving average crossed through the 200-day, which is called a golden cross — a strong long-term buy signal. ECA is somewhat overbought at the current price and so should be purchased under $21. Its trading objective is $26, but long-term investors should buy EnCana as a cornerstone investment in the natural gas industry.