Buy Best Names of Shale Revolution on Pullbacks: Best Acreage and Company-Specific Catalysts
NEW YORK ( TheStreet) -- So far in 2014, the market has been off to a mixed start. With question marks about the strength of the U.S. consumer (with the latest retail results calling consumer spending into question) and mixed macro data (including the latest jobs report), the clean cut bull case is becoming more complicated.
Now, one of the reasons the biotech space was so hot last year was because it is defensively postured ( more immune to macro-economic trends) but it has growth.
Surprisingly enough, within energy, there is a cohort that is similarly positioned: the exploration & production (E&P) companies.
Now, there is no question that these names will trade with the price of oil. But it just so happens that the domestic shale plays can appreciate based on strong acreage, production growth, and low costs.
2013 was the year of the Permian Basin, 2012 was the year of the Eagle Ford, and 2011 was the year of the Bakken. What is the theme for 2014? At this point, most of the plays have been discovered, with even new finds in the Utica "known." So key is choosing the names with the BEST acreage--because they will continue to outperform.
Don't believe these names can be decoupled from commodity prices? Take a look at Cabot Oil & Gas
Sell-offs in this group provide an opportunity to buy best of breed names because this shale revolution is a long-term theme.
The best name in the Eagle Ford and Bakken remains EOG Resources
Best of the Permian? Pioneer Natural Resources
When it comes to the Utica, the best of breed is Gulfport Energy