Small energy stocks — services names in particular — are on the move, pushing the VanEck Vectors Oil Services ETF (NYSEARCA:OIH) up and over its 50-day moving average for the first major upside breakout since November. This looks like it puts an end to a year-to-date downtrend that’s seen the fund lose nearly a third into the low set earlier this month.
Crude oil has been under pressure for months on dimming faith in the OPEC oil supply freeze agreement amid increase U.S. shale output, bloated inventories and tepid U.S. gasoline demand.
So, what changed?
The latest inventory data showed a surprise draw despite the fact production jumped to its highest point since July 2015. This suggests market share gains by U.S. producers vs. OPEC and non-OPEC producers is underway; a bullish development for the American oil industry in general and oilfield servicers in particular.
While it’s hard to say how long this dynamic will continue, for now it’s enough to lead to an oversold rebound in the industry group. This makes many energy stocks prime for either outright buys or bullish options trades.
Here are six such stocks on the move:
Energy Stocks to Buy on This Bounce: Marathon Oil (MRO)
Marathon Oil Corporation (NYSE:MRO) shares are bounding off of a two-month support zone near $11.50, pushing above its upper Bollinger Band for the first time since early April. The stock has enjoyed some positive analyst coverage lately, including a recent upgrade to Buy by Citigroup on July 5.
When Marathon’s results were last reported on May 4, a loss of 6 cents per share missed estimates handily, by 4 cents, on a 88% rise in revenue. Wall Street expects a 14-cent loss on revenues of $1.2 billion when the company reports Aug. 2 after the close.
Should the bulls be able to retake the 50-day moving average, a run at the 200-day average would be worth a gain of 20% from here.
Energy Stocks to Buy on This Bounce: Halliburton (HAL)
Halliburton Company (NYSE:HAL) shares have pulled themselves back over their 50-day moving average in a big way for the first time since February rising more than 10% off of the lows hit earlier this month.
In a recent note to clients, analysts at Barclays issued a cautious outlook on the North American energy industry, but held HAL as one of its two overweight picks. Shares were also upgraded to “Buy” by Seaport Global Securities on Thursday.
When the company last reported on April 24, earnings of 4 cents per share beat estimates by a penny on a 1.9% increase in revenues. Halliburton’s next report is next week, on July 24, and Wall Street wants to see an 18-cent per-share profit on revenues of $4.86 billion.
Edge Pro subscribers have established a position in the August HAL calls, and I suggest going long here.
Energy Stocks to Buy on This Bounce: Apache (APA)
Apache Corporation (NYSE:APA) shares are emerging from a five-month consolidation range with a push over downtrend resistance near $49. Shares are down more than 26% from their December high and nearly hit $100 a share back in 2014 as oil prices peaked.
When Apache last reported on May 4, earnings of 8 cents per share missed estimates by a whopping 7 cents. The company’s next chance at retribution is Aug. 3 before the bell, when analysts will be looking for earnings of 11 cents per share on revenues of $1.45 billion.
Watch APA for a run to the 200-day moving average, last touched in February, which would be worth a 10% gain from here.
Energy Stocks to Buy on This Bounce: EOG Resources (EOG)
EOG Resources Inc (NYSE:EOG) shares are breaking out of an eight-month downtrend that dropped the stock more than 20% from its December highs. Now, EOG is taking a run at the 200-day moving average.
When the company last reported results on May 8, earnings of 15 cents per share met expectations — up from the 83-cent loss reported in the prior year — on a 93% rise in revenue. Analysts are looking for profits of 15 cents per share on revenues of $2.57 billion when the company next reports earnings after the bell Aug. 1.
Watch for a run to at least the early April high near $100, which would be worth a 5%-plus gain from here.
Energy Stocks to Buy on This Bounce: Devon Energy (DVN)
Devon Energy Corp (NYSE:DVN) shares are testing overhead resistance from a two-month consolidation range as well as its 50-day moving average — a level last crossed back in early April. Analysts at Piper Jaffray initiated coverage this week to give shares a boost, assigning a $48 price target — a level not seen since January.
When Devon reported its last batch of earnings May 2, the company posted a 66.8% rise in revenues that drove profits of $1.07 per share — a 67-cent beat. The company will next report results on Aug. 1, and analysts hope to see Devon report a 36-cent profit on sales of $3.3 billion.
Watch for a move to the 200-day average, which would be worth a gain of more than 26% from here.
Energy Stocks to Buy on This Bounce: National-Oilwell Varco (NOV)
National-Oilwell Varco, Inc. (NYSE:NOV) shares are rising up and out of a four-month downtrend channel after suffering a 24% fall from their early March highs. Well off of the high of $80 hit back in 2014, the stock has been struggling for direction over the past two years oscillating near the $30-a-share level.
Shares were upgraded to “Buy” by analysts at Piper Jaffray on Thursday, though, so a little bullishness is in the cards.
NOV’s last earnings report included a 17-cent loss that at least was 3 cents ahead of the consensus mark. That came on a 20.5% year-over-year decline in revenue. National-Oilwell Varco next reports earnings on July 27, and analysts expect a 14-cent loss on $1.78 billion in revenues.
Watch for NOV to return to its prior trading range near $39, which would be worth a 10%-plus gain from here.