Sell These Stocks Now!
Back in late November, I revealed three stocks to buy in response to a potential winter surge in the price of natural gas.
As you may remember, Ultra Petroleum (UPL), Cabot Oil & Gas (COG), and Southwestern Energy (SWN) were my three favorite ways to “winterize” your portfolio.
Let me quickly recap why…
The three companies above share some of the lowest production costs in the natural gas exploration and production industry. And if the price of natural gas were to surge, quickly expanding margins would have these companies at the top of Wall Street’s buy list.
Now fast forward to today…
Ask any energy trader and they’ll tell you the natural gas market has been absolutely nuts over the past few days. The commodity exploded to new multi-year highs at $5.60 mmBtu on extended bouts of extreme cold hitting the Eastern and Midwest US.
That’s 40% beyond where the commodity traded a few weeks ago, and a whopping 52% higher than where I recommended UPL, COG, and SWN!
Speaking of which…
Thanks to this phenomenal winter run in natural gas, shares of these industry-leading companies are in high demand. UPL is trading near 52-week highs at $24 while SWN is holding near multi-year highs $42. And let’s not forget COG, which is also trading near 52-week highs at $40.
No doubt about it, it has been a heck of a run for these natural gas producers over the past few months.
But now it’s time to sell two of these stocks…
If you bought UPL and SWN on my recommendation last November, take your gains now. Doing so should give you a 19% and 9% profit respectively. Not bad for a few months work!
But whatever you do, don’t sell COG…
You see, this company has great exposure to the Marcellus Shale. As you may know, this is one of the most profitable places in the US to drill for natural gas. In fact, internal rates of return are well over 200% for COG in the Marcellus with gas trading at current levels.
Folks, with natural gas surging like it is, COG is going to have a blockbuster fourth quarter of 2013 and an amazing first quarter of 2014.
I recommend holding shares of this company for at least the next six months to capitalize on further gains!
Until Next Time,
Justin Bennett
Category: Commodities
