As a trader, you always want to buy strength and sell weakness. Momentum matters. And in the sector of energy exploration and production, where I've been negative lately, one independent E&P is showing the type of strength that makes me want to buy it -- even in a lackluster energy environment.
I'm recommending a buy of Noble Energy (NBL) today.
I've been a very strong advocate of investment in the independent oil companies as an important part of every energy portfolio -- it's just a bang-for-the-buck equation, where growth from each dollar of capex from smaller E&P's like Apache (APA), Anadarko (APC), Devon (DVN) and Noble far outpaces the big integrated companies.
Inside of that subsector, however, many challenges emerge for each individual company, and Noble definitely has its share. But positives have emerged from Noble that drive me to it now.
One is growth potential. While its investment in the Leviathan field off the Israeli coast might be slow to come to fruition, the potential of unproven reserves there could literally change the balance of Middle East energy. But even more quickly in the Niobrara in Colorado, there will be tremendous volume gains that will be seen in the next year and into 2014.
Of course, the other independent E&P companies I mentioned have plans for volume growth, too. But I'm also a trader who lets the market tell me what I need to know -- and the action of Noble energy in the past six months when compared with the others tells a very strong story.
Through very tough and volatile markets recently, Noble has managed to maintain its strength in a way that the others haven't. That's nothing to take for granted -- always buy strength when you can make a fundamental case for a company. And I can with Noble. I'm looking for it to see $115 a share in 2013, even if the oil markets remain flat. I recommend the stock at $97.
