Since the summer of 2014, the energy sector has been a disaster zone as the U.S. shale-OPEC market share price war intensified. The Energy Select SPDR (XLE) is down nearly 50% from its high and recently traded down to levels last seen in 2010 and 2011. Crude oil is down at levels last seen in 2003, well below the $30-a-barrel level.
Fundamentals look like they are just getting worse. The lifting of Iranian sanctions is set to dump somewhere around 800,000 barrels per day into an already badly oversupplied market.
Inventories are nearing “tank tops” in many areas. And layoffs are starting to bite, with oil services giant Schlumberger (SLB) announcing 10,000 job cuts this week.
And yet, some optimism (or maybe just aggressive short covering) is being seen in the smallest, most vulnerable stocks in the sector — in many cases marking the end of long, persistent, multi-month downtrends — as the bulls are encouraged by chatter of fresh central bank stimulus.
More cheap money easing will benefit the energy sector not only by spurring economic growth and increasing energy demand, but also via currency effects as a weakened dollar would give crude oil futures some much needed relief.
Here are five picks to play along.
Energy Stocks on the Rise: Southwestern Energy Company (SWN)
After hitting a high of $49.16 in April 2014, Southwestern Energy Company (SWN) shares dropped to a low of just $5 back in December, a total decline of nearly 90%, before pushing back toward $9 a share now.
The 50-day moving average has been exceeded for the first time since May, setting up a possible retest of the 200-day average near $16 — which would be worth a double from here.
The company will report earnings on Feb. 25 after the close. Analysts are looking for a loss of four cents per share on revenues of $761 million.
Energy Stocks on the Rise: Cabot Oil & Gas Corporation (COG)
Cabot Oil & Gas Corporation (COG) shares are perking up and over their 50-day moving average for the first time since June. A double-bottom pattern near $15 a share is providing the support for the move.
Analysts at Topeka Capital Markets are looking for shares to return to $25 — a 30% move from here — on the company’s solid asset base and solid growth profile for 2017.
We will know more when the company reports earnings on Feb. 19 before the bell. Analysts are looking for a loss of six cents per share on revenues of $325.6 million.
Energy Stocks on the Rise: Antero Resources Corp (AR)
Antero Resources Corp (AR) shares are working to lift up and out of a consolidation range going back to August centered near $22.50 a share.
Based in Denver, the company maintains an asset base of 543,000 net acres in West Virginia, Ohio and Pennsylvania.
The company will report results on Feb. 24 after the close. Analysts are looking for earnings of 12 cents per share on revenues of $590 million.
Energy Stocks on the Rise: Gulfport Energy Corporation (GPOR)
Based in Oklahoma City with 203 employees, Gulfport Energy Corporation (GPOR) focuses on the production of shale gas and oil in the Utica basin in Eastern Ohio as well as the Louisiana Gulf coast.
The company was initiated with a buy rating by JPMorgan analysts and was added to the Jefferies Franchise Picks list back in December.
The company will release results on Feb. 24 after the close. Analysts are looking for a loss of 11 cents per share on revenues of $165.6 million.
Energy Stocks on the Rise: EQT Corporation (EQT)
Based in Pittsburgh, EQT Corporation (EQT) focuses on the Marcellus shale play and maintains roughly 10.7 trillion cubic feet of proved natural gas, NGLs and crude oil reserves. Shares were upgraded to “buy” by analysts at Tudor Pickering on Jan. 14.
The company will report results on Feb. 4 before the bell. Analysts are looking for a loss of 22 cents per share on revenues of $510 million.