U.S. equities are pushing higher on Monday on M&A hype in the semiconductor space, but the single most interesting move underway is in the energy sector.
Crude oil pushes to levels not seen since 2015 on a number of headlines out of the Middle East. Saudi Arabia seems to be in the midst of a power play as Crown Price Mohammed bin Salman ordered the arrest of other members of the royal family on anti-corruption allegations. Two other princes have died, one in a helicopter crash and one in a gunfight.
Also adding to the upward pressure was the downing of a ballistic missile out of Yemen by the Saudi-coalition, something Riyadh called “direct Iran military aggression” in what looks like an escalation of a regional fight for influence.
As a result, a number of stocks in the energy sector look ready to emerge from multi-month downtrend. Here are five on the move, as well as two related ETFs playing along:
Schlumberger Limited. (NYSE:SLB) shares are up more than 5%, crossing back over its 50-day moving average, after lifting off of double-bottom support near $62.
In its recent post-earnings call, management said they believe the current situation in the energy market is more positive than is reflected by the market as U.S. rig counts level off.
The company will next report results on January 19 before the open. Earnings are looking for earnings of 46 cents per share on revenues of $8.2 billion. When the company last reported on Oct. 20, earnings of 42 cents per share matches estimates on a 12.6% rise in revenues.
Haliburton Company (NYSE:HAL) shares are lifting up and off of their 50-day moving average closing in on the 200-day average that hasn’t been crossed since April.
In a recent note, FBR analysts highlighted that the company had the strongest quarterly results of the big three diversified oil field services provider. Management, in their post-earnings call, said they believed crude oil near the $50-a-barrel level would drive significant activity in the North American marketplace.
The company will next report results on Jan. 22, with earnings of 46 cents expected on a $5.6 billion in revenues.
When the company last reported on Oct. 23, earnings of 42 cents beat estimates by four cents on a 42% rise in revenues.
Pioneer Natural Resources (PXD)
Pioneer Natural Resources (NYSE:PXD) shares are lifting towards their 200-day moving average, lifting off of support near the 50-day average.
Already up more than 26% from its August low, a return to the April high would be worth another 25% gain from here. Analysts at Imperial Capital recently upgraded their price target to $172 on production growth and a better cost structure.
The company will next report results on Feb. 7 after the close. Analysts are looking for earnings of 53 cents per share on revenues of $1.6 billion.
When the company last reported on Nov. 1, earnings of 48 cents per share beat estimates by 20 cents on a 23.1% rise in revenues.
Devon Energy Corp. (DVN)
Devon Energy Corp (NYSE:DVN) shares are extending away from their 200-day moving average returning to levels not seen since April. Up from 40% from their early July low, watch for a return to the January high near $49.
That would be worth a 20% gain from here. Analysts at Stephens recently upgraded shares to buy in the wake of solid quarterly results.
The company will next report results on Feb. 13 after the close. Analysts are looking for earnings of 55 cents per share on revenues of $3.4 billion.
When the company last reported on Oct. 31, earnings of 43 cents per share beat estimates by five cents on a 9.5% rise in revenues.
Apache Corporation (NYSE:APA) shares are rising off of double-bottom support in the high-$30s, threatening to move over resistance from the early October highs setting up a run at the 200-day moving average and the July highs near $51.
That would be worth a 13% gain from here. Shares were hit in late August by disappointing quarterly results, but sentiment is turning now after a positive result last quarter.
The company will next report results on Feb. 22 before the bell. Analysts are looking for earnings of 13 cents per share on revenues of $1.5 billion.
When the company last reported on Nov. 2, earnings of six cents per share beat estimates by six cents despite a 3.5% drop in revenues.
Oil Services ETF (OIH)
VanEck Oil Services ETF (NYSEARCA:OIH) is rising away from its 50-day moving average, closing in on its 200-day moving average, setting up a move up and out of an inverted head-and-shoulders bottoming pattern going back to June.
A break of the neckline near $26 would set up a move to $30, which would be worth a gain of 15% from here.
The ETF gives easy and diversified exposure to the oilfield services industry, including holdings such as SLB, HAL and Transocean Ltd (NYSE:RIG).
U.S. Oil Fund (USO)
With crude oil pushing to two-year highs, the United States Oil Fund (ETF) (NYSEARCA:USO) is extending enjoying a “golden cross” as its 50-day moving average passes up and over its 200-day average.
This reverses a “death cross” from April and sets up a possible move up and out of a three-year consolidation range near $11.
USO is down roughly three-fourths from the highs set in the summer of 2014. But now, with geopolitical turmoil in the Middle East heating up, global inventories diminishing, and U.S. rig counts leveling off, higher energy prices appear to be persistent.