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Today I am recommending a bullish trade on New Jersey Resource Corporation (NYSE:NJR), a natural gas distributor.
Looking at commodities, oil is now in a bear market. It recently finished its longest daily losing streak on record before finding some support near the $55 level.
That is a positive overall for U.S. consumer and the economy, but it’s certainly not good for energy stocks, which have also been hit extremely hard this month.
If we look at a chart of NJR, we see it has been trading in a fairly consistent range for the past few months. While the falling price of oil has hurt many energy stocks, NJR trades more in line with the price of natural gas.
NJR has benefited as natural gas prices have jumped this week. In the chart below, you can see the sharp spike in the price of natural gas as a result of the cold winter weather sweeping across the country.
I’m expecting natural gas prices to remain elevated, which should provide a tailwind for NJR’s share price.
For that reason, I recommend taking a bullish position on NJR:
Buy to open the New Jersey Resources Corporation (NJR) Feb (2019) 50 Calls (NJR190215C00050000) at $1.25 or lower.
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InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.