4 'Bad' Energy Companies That Make for Good Trades

(Energy stock trading story updated for Nabors Industries' catalysts)

NEW YORK (TheStreet) -- There's a cynical stock market adage that explains recent trading in shares of Transocean(RIG) , Weatherford International(WFT) , Nabors Industries(NBR) and Chesapeake Energy(CHK) : Bad companies make for good trades.

It's a bit of trading knowledge that can help investors identify stocks where even if the long-term outlook is promising, short-term management mistakes offer trading opportunities.

A stock goes down because it messed up so much, and that presents an opportunity to ride it back up. Often, though -- and this is key -- it's riding that stock back up before it goes back down again because management messes up yet again. Positive headlines are magnified, but so are the negative ones.