So this is what winter is supposed to feel like huh? Unless you're one of the lucky few breaking flip flops in Key West, chances are you've felt the sting of cold weather and the angry end of the new phrase that pays "Polar Vortex." While it may sound like a finishing move for Subzero or Mr. Freeze's getaway car, what it means is cold. Very cold.
Natural Gas Rally
The result has been continued price pressure on Natural Gas. I can see T. Boone Pickens rubbing his hands together and giggling like a school girl as we speak. In fact, Nat Gas futures have made an all-out assault on $5, spiking higher near $5.50 before a brief pullback that set the stage for today's rally over $5.25.
Three Stocks That Benefit
Even at current prices the US still enjoys a huge discount compared to what they pay in Europe and especially Asia. This price difference has led to continued conversations about the possibility of opening up the commodity for exportation. If exports were allowed the increased demand would send Nat Gas prices higher and lower America's current price advantage. Cheniere Energy (LNG) operates the Sabine Pass LNG Terminal along the border between Texas and Louisiana which is the largest receiving terminal by regasification capacity in the world. If Nat Gas were exported, there would not be enough Beano around to slow the stock down. Even if the US keeps its energy doors shut higher Nat Gas prices are bullish for Cheniere.
In addition to LNG tankers, increased prices would be great for companies like Cabot Oil & Gas (COG) who are involved in exploration and development of energy properties. The company has already seen earnings estimates increase for next year. Cabot reports earnings on February 20th after the market close and analysts are looking for $0.17 a share out of Q4. Cabot has a history of earnings growth and the stock price has appreciated along with the growth.
A relative newcomer to the publicly traded market, Athlon Energy (ATHL) is an exploration company with operations primarily in the Permian basin of West Texas. In the last 30 days, three analysts have revised earnings to the upside. This bullish revision along with a positive outlook for Nat Gas has ATHL at a Zacks #1 Rank.
Off the Charts
From a technical perspective, COG has the best chart or in this case charts. First, a quick glance at the Price and Consensus chart shows a track record of earnings growth. Year after year upwards revisions have helped guide the stock higher.
Now let's take a glance at the daily chart and make a few observations. First, note the bullish trendline since May 2012. The bounce off the trendline last November was the first chance to get in on the pullback. I like to wait for confirmation of the trend prior to getting in on a stock. Earlier this month we received two confirmations. There was a bullish cross on the Stochastics on January 16th and the stock found support on the 25×5 SMA, which is the 25 day moving average offset to the right by 5. In addition to all this, breakout trading crowd appreciates the recent break of the 9/3/13 high of $40.34. This makes a pretty bullish case for COG in the near term.
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