WPX Energy Inc (NYSE:WPX) — WPX was first reviewed by me on April 12, suggesting a buy at $7 with a target of $8.50. I am obviously delighted by its advance, but at the same time wish I had tracked it during the advance to its current high.
On Nov. 3, Standard & Poor’s Capital IQ upgraded its opinion of WPX stock from “buy” to “strong buy,” five-star rating. S&P’s upgrade is based on an 8X multiple to their 2018/EBITDA estimate. They project high economic returns in all three of WPX’s crude oil basins: The Permian, Bakken and Williston. Its acquisition of RCI Exploration & Production and the divestiture of a natural gas producer shifts its focus to that of a liquids producer with its potential for better revenue and earnings growth. As a result, S&P forecasts 25% oil growth in 2017 and 50% oil growth in 2018.
Since its low at under $4 per share in January, WPX stock has advanced on a series of “step-ups”; the retracements form a bull channel. The advance was supported by a long-term buy signal (Golden Cross) early in May, and since then the advance has tracked the 50-day moving average to its high at $16. Since that high on Dec. 1, the stock has been consolidating in a “Flag” formation, and this too is bullish since most flags break to the upside and a new high.
Thus, traders should try to buy WPX at $14.50 with a target of $17 for a proposed percentage gain of over 17%.