Jim Cramer told his Mad Money viewers Wednesday night that energy has been among the best performing sectors during the pandemic, but there is one name in particular that's been overlooked, and that's Coterra Energy (CTRA) .
Unlike Pioneer Natural Resources (PXD) and Devon Energy (DVN) , which are mostly oil producers, Coterra is 75% a natural gas producer, one with great acreage in the Marcellus Shale region, but also exposure to the lucrative Permian Basin. Like its peers, Coterra has moved to a disciplined production plan that includes a variable dividend. Right now, that dividend is 5.2%, but Cramer felt that upwards of 7% is possible.
But what Cramer liked most about Coterra is its enterprise multiple, which sits at just 4.2 times earnings. This compares to multiples of 5.6 times and 6.1 times for Pioneer and Devon, making Coterra one of the best producers with the best valuations.
Let's check out the charts and technical indicators.
In this daily bar chart of CTRA, below, we can see an "interesting pattern" to the price action. From last February to August prices drifted lower and then "out of nowhere" prices surged to early October. From a high in early October prices drifted lower again until around the middle of January when another rally got underway. Prices are above the 50-day moving average line now and above the rising 200-day line which was tested last month.
The On-Balance-Volume (OBV) line has moved with the price action. The Moving Average Convergence Divergence (MACD) oscillator is pointed up and is above the zero line.
In this weekly Japanese candlestick chart of CTRA, below, we can see a base pattern playing out over the past three years. Prices are trading above the rising 40-week moving average line. The weekly OBV line shows a bullish rise from August to confirm the price gains. The MACD oscillator is very close to a new buy signal.
In this daily Point and Figure chart of CTRA, below, we can see a potential upside price target of $27.
This second Point and Figure chart of CTRA, below, uses weekly data and here a possible $31 target is shown.
Bottom line strategy: CTRA is a new name for me but the charts suggest further price strength ahead. Try to buy CTRA in the $23-$22 area while risking to $19.50. The $31 area is our price objective.
