Apache Corporation (NYSE:APA) — This large-cap oil and gas driller punched through resistance after disclosing a major oil and gas discovery in West Texas on September 13. The discovery, it turns out, is a potential giant and among the biggest in the last ten years in the Permian Basin.
Zacks had also recommended APA on September 9 at about its current price of $60.
Apache has had its earnings and revenue estimates increased over the last month by several analysts. Last Wednesday the stock jumped almost 6% on high volume, following a Credit Suisse analyst’s report that said the new oil field is in a low-pressure area and a lower-cost environment which makes the economics of extraction attractive.
Credit Suisse estimates earnings of -82 cents in 2016 but looks for an EPS increase to $1.15 in 2017, and $2.96 in 2018.
Technically APA rose from a bear market in March when it broke through its long-term resistance line at about $48 on high volume. Then in mid-April, its 50-day moving average crossed through the 200-day moving average, which is called a “Golden Cross,” a long-term buy signal.
The stock continued to advance before consolidating at about $50 to $60. The bull market in APA stock was reinforced when it fell in late-July, quickly reversed in August from under its 200-day moving average at $49.56, and gapped through its 50-day moving average at $53.69.
Both fundamental and technical responses to the new Permian find make this stock an outstanding candidate for both traders and investors. Traders should try to buy Apache under $60 with a trading target of $70. Investors should consider APA stock as a cornerstone, large-cap oil investment that could provide excellent long-term returns.
