Looking for Longer-Term Yield Names

 | Apr 04, 2014 | 12:42 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:






Are you not entertained? Today's chop makes this feel more like a cooking show rather than a market. Ironically, the S&P 500 is barely off the unchanged line, but small-caps and technology are being hit quite hard.

There is still a scurry for the older, more established, lower beta names, some of which carry decent weighting in the S&P 500. Biotech is again bleeding red. The panic sounds are coming from those who bought the open or chased the first big gap fill from this morning.

It isn't that the market is really crashing. The $189 area looks key on the SPDR S&P 500 (SPY) intraday, but I can't see it staying that way for long unless it gets back above $188.75. Otherwise, my bias is lower for the afternoon.

While I don't have a ton of comfort in the overall market, I will continue to look for some longer-term yield-oriented names. I have two identified for purchases today: North Atlantic Drilling NADL and Penn West Energy (PWE).

NADL is a spinoff from Seadrill (SDRL) representing the harsh environment capable rigs. The focus here is on the vastly untapped Arctic region. The company is aggressively trying to make inroads into Russia, which isn't exactly the easiest thing to do at the moment, but any deal there will be huge for the company. Until then, they have plenty of contracts with big-name oil companies and every one of their rigs is in play at the moment. The company is targeting a dividend around 10.2% or $0.92 per share. I am also attracted to the bullish inverse head-and-shoulders pattern on the daily cart. The target is only $9.70, but for a $9 stock, that wouldn't be half bad.

North Atlantic Drilling (NADL) -- Daily
Source: StockCharts.com

The other name is Penn West Energy. I have owned and/or traded this name for many years now. Canadian Royalty Trusts (Canroys) are far different today than they were a decade ago. While distributions are still strong, they are not nearly what they used to be.

Now they are about exploration, revenue, assets and book value. While PWE has struggled recently, the company has a strong book value. It's up near $14 a share along with a 6% dividend, which I think looks relatively safe. Add the recent insider buying in March and early April to the breakout on the daily chart and PWE looks like a good purchase to me. Fellow Real Money contributor Tim Melvin has done some great work on this name and I suggest if you have an interest in PWE, you give his take on the company a read. 

The daily chart has very strong momentum right now and it feels like it will get to $9 with relative ease. The $8.30 area is support on the daily chart and I see confirmation in the RSI of the price breakout.

Penn West Energy (PWE) -- Daily
Source: StockCharts.com

Expanding to the weekly chart shows the potential for a much longer-term and more powerful breakout. PWE seems destined for $10 this year rather than $9. If that is the case, then once you add in some dividend distribution, you are left with what could be a very nice winner of a stock.

A fall below $8 on a weekly close should take conservative traders out of this name, but I am willing to give it all the way to $7.25. The CCI and RSI both look like they have room to run, which should drag the price along with them.

Penn West Energy (PWE) -- Weekly
Source: StockCharts.com

Columnist Conversations

Spent a good amount of time with PayPal CEO Dan Schulman this week...and came away fully understanding why thi...
Has quietly taken a mini beating over the past few weeks. Might be worth a look on Monday given everything tha...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.