CONSOL Energy Inc. (CNX) — Once at over $100 a share, CNX stock now trades for less than $10.
This natural gas and coal producer is one of the leading diversified energy companies in the United States and has significant assets in the Appalachian Basin.
CONSOL has been divesting its coal assets, and on Tuesday, CNX stock jumped almost 5% after the company said it will sell its Buchanan coal mine and certain other metallurgical coal reserves for a total of $420 million. This was viewed as a positive as coal demand and prices have been on the decline, and the energy company also said it is suspending its dividend payment to increase liquidity.
Following the announcement, S&P Capital IQ Equity Research reiterated its “Strong Buy” opinion on CNX stock and $14 price target. Its analysts note CONSOL has strong natural gas assets in the Marcellus and Utica shale plays, meaning the company could benefit significantly if natural gas demand and prices rise. Overall, they expect 15% growth in oil and gas production this year on a relatively low capital investment of $250 million.
CNX stock made an all-time high above $115 in June 2008. It then fell sharply, hitting a low below $20 in November of that year. From late 2008 to June 2015, CNX stock traded in a range from $25 to $55, before plummeting to a low of $4.54 in January 2016.
In retrospect, the January low was the head of a head-and-shoulders bottom. The neckline of the formation is at about $9, and a break from there is supported by high accumulation and a new buy signal from the MACD indicator.
Buy CNX stock at the market price for a trade to its descending 200-day moving average at about $13. If successful, this will result in a profit of more than 40%.