Newfield Exploration (NFX)
Newfield Exploration (NFX): Looks like a leaderBy Michael Cintolo, Chief Analyst, Cabot Growth Investor and Cabot Top Ten Trader
From Cabot Wealth Advisory 11/5/15 Sign up for Cabot Wealth Advisory—it’s free!
While I’m not a huge investor in exchange traded funds (ETFs), when you’re talking about big potential turnarounds, I think taking a stab at XOP or GDX (or any other well-traded sector ETFs for energy and gold) can work just fine. These funds have had huge declines, so when the trends turn up, they can move pretty well on the upside.
That said, I’m more interested in individual stocks—if you find the leader of the sector, it can really put on a show when the tide turns. And, interestingly enough, a couple of stocks in each group have appeared in Cabot Top Ten Trader, my advisory that focuses on the stocks that are under the strongest accumulation in the market. That’s encouraging because there’s some nascent leadership already forming in these groups, despite the ongoing bottoming process.
One I’m intrigued with is Newfield Exploration (NFX), a stock that’s already hitting multi-month highs. Here’s what I wrote about the company in Cabot Top Ten Trader on October 19:
“Continuing low prices for crude oil have pressured many stocks in the oil patch, and Newfield Exploration has felt the same pressure. But this Texas-based oil and gas explorer, driller and producer with major holdings in the Anadarko Basin, Uinta Basin and Williston Basin has weathered the storm better than many competitors because of the quality of production from its wells. Newfield’s revenue grew by 23% in 2014, even as crude prices plummeted during the second half of the year. And while revenue has declined for three straight quarters (and analysts are looking for around a 23% dip in revenue for the year), earnings are still solidly in the black. When Newfield reports Q3 results on November 3 after the market closes, analysts expect to see 17 cents per share in earnings and revenue of just over $468 million. If oil prices were to take another skid lower, all bets would be off, but even with crude under $50 a barrel, Newfield will continue to make money. And when oil prices rise, Newfield will likely rank among the leaders.”
NFX just released earnings Tuesday (November 3), and they were good enough: revenues and earnings were down from the prior year, but the bottom line was still solidly in the black (21 cents per share, a penny above expectations), thanks in part to the company’s top-notch hedging program.
More importantly, the stock remains in great shape—it actually already tagged multi-month highs in mid-October and despite this week’s dip is still just a few points shy of new high ground. On a day-to-day basis, NFX will probably get yanked around by the movement in oil and gas prices, but should the sector get going, I think the stock will be one of the best performers.
You can consider a small position here … or sign up for Cabot Top Ten Trader to get not only my updated advice for Newfield, but to be on top of all the new leaders of this market advance, know where to buy them, and have a stop in place to know where to book your profits.
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|Newfield Exploration (NFX)
4 Waterway Square Place, Suite 100
The Woodlands, Texas 77380
|Index Membership: N/A
Sector: Basic Materials
Industry: Independent Oil & Gas
Full Time Employees: 1,331