I wanted to take this hot summer Thursday to update you on a few winner stocks I've recommended.
The last four I gave to subscribers were Southwestern Energy (SWN) , Cheniere Energy (LNG) , Silver Run Acquisitions (SRAQU) and Anadarko Petroleum (APC) , all up big since those recommendations. This start to my column isn't as self-serving as it sounds, although I think it's OK to point out when you've been hot, especially if you've been equally transparent about pointing out when you're not, as I was through late 2015 and earlier this year.
The point is that I hate where the markets are trading today. Oil is dropping based upon a gasoline glut that has been a fact since March but only seems to mean something now, and the low volumes and high volatility are always a temptation to make silly trading moves that can get you in trouble.
Instead, I'm advising you not to do anything, except perhaps tweak some of the holdings you've already got --hence, the update.
Southwestern Energy was always a speculative play based upon a weak oil market while looking at a natural gas market that likely might see some storage drops in the middle of a heat wave. SWN was particularly under pressure and I thought ready to respond to an increase in degree days combined with a better outflow.
We've gotten that. Even today, the 17-Bcf injection into storage was well below the 22 Bcf that was expected, although it still leaves a very wide gap from the five-year average. Nat gas is spiking above $2.85, and what I want to see is a pop above the key $3 level (and above $15.30 for SWN shares). Otherwise, the continuing glut in nat gas again will make itself known and will dampen both nat gas and SWN. If you wanted to take the money and run right now, I couldn't blame you.
Cheniere is working out to be a super long-term investment. It's doing everything I hoped it would when I wrote about it in June, including technically breaking out strongly over $40. I'm sticking with this one for now.
Silver Run finally has made its big move, acquiring a majority stake in the private oil company Centennial. I've read the release from Silver Run and I'll say I'm not totally sure what it says, with Silver Run ultimately becoming the "development" arm for Centennial. What I do know is that Mark Papa will be heading an oil company again, Silver Run walks into some really prime acreage in the super-hot Permian, does it with no debt, and has the support of private equity powerhouse Riverstone Holdings, which will allow Papa to develop those resources at his own pace. That's starting in the oil game way ahead of most. I think I have to wait for the Centennial initial public offering now -- and if it comes when oil is trading above $50, it'll pop big again.
Finally, Anadarko has come out from the shadow of almost every analyst out there, proving that as U.S. exploration-and-production companies go, it was woefully undervalued and underrated. As the oil market has declined in recent sessions, Anadarko has been steadfastly trading near $54, while others have sagged. This is a very good sign going forward, but I'm still uncomfortable with oil under this kind of ridiculous but real pressure from a passing gas glut. Still, if you wanted to trade this one and get out waiting for another opportunity, I can certainly bless that move (and likely will do myself).
Four winners. Where's the next one? It's almost surely in a refining stock, where the markets have overreacted to a product glut and oil rally. But that's for the next column. For now, my advice is to do as little as possible.