BloggingStocks

Cramer on BloggingStocks: Oil, Gas Stocks in a Tug of War

Jim Cramer — 2008-07-01T09:48:00+00:00

Filed under: Exxon Mobil (XOM), Columns, Chesapeake Energy (CHK), ConocoPhillips (COP), IndyMac Bancorp (IMB), Cramer on BloggingStocks

TheStreet.com's Jim Cramer says both oil futures and equity futures can move these hot issues.

Will the futures pull down the oil and gas stocks today? No, I don't mean the oil futures, I mean the equity futur

Last week when oil exploded, we caught two days of trading that dropped the stocks hard. We caught a bit of a bid in the nat gases like Chesapeake (NYSE:CHK) and Devon (NYSE:DVN) but at the end of the day, but the stocks were truly overwhelmed by the simple fact that they are in the indices.

This pattern has really held down the integrateds: last week Conoco (NYSE:COP) should have exploded, but it couldn't because it is such a big part of the S&P. Chevron (NYSE:CVX) and Exxon (NYSE: XOM) are no different.

The natural gas stocks are not as big a factor, but they can be rocked down without a problem.

I am not saying to avoid looking at the oil futures. They can control the stocks. I am saying that the equity futures tide can take down anything, even when the oil futures spike hard.

Watch 'em both. Ideally, the best time to buy is when oil is strong but the S&P futures are stronger to the downside. Witness Devon. That stock traded 7 points lower on Thursday because of the S&P futures even as the company's prospects at plus-$13 nat gas are huge and the numbers are therefore way too low around the Street because it has so much available supply.

That's when to strike best.

Random musings: Peter Eavis and Herb Greenberg have made a cottage industry out of writing about the mezzanine lenders, Allied Capital (NYSE: ALD) and American Capital (NASDAQ:ACAS). So far these two companies have managed to avoid the fate of Indymac (NYSE: IMB). Today's "Heard on the Street," this one by Eavis -- now that Herb has left the day-to-day -- develops the same themes as usual: dividend too large, can they pay it? I figure the companies sell something saleable, up the dividends and issue more shares just to stay one step ahead of the posse. Boy, the people who run those companies must be sick of these two. They probably rejoiced when Herb went out of the Internet and TV columnist business to work at Greenberg Meritz.

At the time of publication, Cramer was long Devon.

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Chesapeake Energy (CHK): Shares cycle in bullish 'flag' consolidation pattern

Larry Schutts — 2008-06-25T13:41:00+00:00

Filed under: Good news, Chesapeake Energy (CHK), BP p.l.c. ADS (BP), Technical Analysis, Anadarko Petroleum (APC), Stocks to Buy

Chesapeake Energy Corporation (NYSE: CHK) is engaged in the acquisition, exploration, and development of properties for the production of natural gas and crude oil. The firm is the second-largest independent producer and third-largest overall producer of natural gas in the United States. Company properties are located in the US midcontinent region, along the Gulf Coast, in the Permian Basin, and in the Ark-La-Tex region. It owns interests in nearly 39,000 producing wells and has nearly eleven trillion cubic feet equivalent of proved reserves.

Chesapeake pleased investors last week, when it announced that it had formed a joint venture with Goodrich Petroleum (NYSE: GDP) that would give it working interests in deep strata of the Haynesville Shale of East Texas and Louisiana. The move is expected to make Chesapeake the largest U.S. natural-gas producer, pushing it past BP (NYSE: BP) and Anadarko Petroleum (NYSE: APC).

The CHK share price popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with ten "strong buys," eight "buys" and nine "holds." The CHK Price to Book ratio (3.32), EPS Growth rate (25.29%), Operating Margin (26.31%) and Net Profit Margin (13.55%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 79% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $31.38 and $68.10. A stop-loss of $54.50 looks good here. Note that the firm is next expected to report quarterly results in late July.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

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Chesapeake Energy (CHK) announces joint venture in Louisiana

Brent Archer — 2008-06-16T14:35:00+00:00

Filed under: Good news, Chesapeake Energy (CHK), Options, Technical Analysis, Oil

Chesapeake Energy (NYSE: CHK) shares are trading higher after the company announced it has entered with Goodrich Petroleum Corp. (NYSE: GDP) into a joint venture to drill for oil and natural gas in northwest Louisiana. Oil and natural gas futures are both rising this morning, giving CHK an extra boost. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CHK.

After hitting a one-year low of $31.38 in August, the stock hit a one-year high of $61.44 last week. CHK opened this morning at $60.48. So far today the stock has hit a low of $59.78 and a high of $61.45. As of 11:50, CHK is trading at $60.96, up $1.70 (2.9%). The chart for CHK looks bullish and deteriorating slightly, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.

For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 4.2% return in just one month as long as CHK is above $50 at July expiration. Chesapeake would have to fall by more than 18% before we would start to lose money.

CHK hasn't been below $50 since April and has shown support around $52.50 recently. This trade could be risky if the prices for oil and other energies fall off some in the next few weeks, but even if that happens, that position could be protected by support the stock might find above $50, where it bottomed out in the past two months.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in CHK.

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Option Update: Chesapeake Energy volatility elevated, shares at record high

Paul Foster — 2008-06-06T12:25:00+00:00

Filed under: Chesapeake Energy (CHK), Options

Chesapeake Energy (NYSE: CHK), the third-largest overall producer of natural gas in the U.S., is recently up $2.68 to $58.76. Bloomberg reports Natural Gas Futures are up 1.93% to 12.76. RBC Capital Markets has an Outperform rating on CHK. CHK call option volume of 52,281 contracts compares to put volume of 9,743 contracts. CHK July option implied volatility of 43 is above its 26-week average of 34 according to Track Data, suggesting larger price movement.

Volatility Index S&P 500 Options-VIX up 2.46 to 21.09.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Billionaire builds stake in Sandridge Energy (SD)

Steven Halpern — 2008-06-02T15:17:00+00:00

Filed under: Newsletters, Chesapeake Energy (CHK), Commodities, Oil, Stocks to Buy

"The boom in natural gas prices has been good for North American producers and their investors, both of which continue to be upbeat on the sector as share prices also keep rising," says Bill Martin.

In his exceptional BullMarket.com, he looks at SandRidge Energy (NYSE: SD), where its billionaire CEO as well as a director have continued to buy shares, despite the stock trading near "peak levels."

"Oklahoma City-based SandRidge focuses on the exploration, development, and production of oil and gas in the West Texas Overthrust, East Texas, and Mid-Continent (Oklahoma) regions.

"President, and CEO Tom Ward purchased 460,000 shares at $48.95 on May 19th/20th, which increased his already substantial holdings to nearly 36.95 million shares, or a 25.27% stake.

"It was the first purchase for Ward since he announced in March his attention to buy up to $100 million in stock on the open market this year. His only other open-market purchase came in November 2007, when he took down 4.17 million shares at $26.00 in the company's initial public offering.

"Daniel Jordan, a SandRidge director, also bought 60,000 shares at $48.41 on May 16th/19th, which increased his holdings to 1.1 million shares. It was his third purchase. Several insiders bought into the company's IPO last fall and another director picked up $200,000 in stock in March.

"Ward, a self-made billionaire (and minotirty owner in the Seattle SuperSonics) has been the chairman and CEO of SandRidge since June 2006 and the president since December 2006. He made his billions as the co-founder, former president, and chief operating officer of Chesapeake Energy (NYSE: CHK), one of the largest independent natural gas producers in North America.

"When Ward retired from Chesapeake, he told the Oklahoma City Journal-Record earlier this year, because 'it was just time for me to move back to a smaller company, back to something I could get my arms around operationally.'

"Meanwhile, SandRidge got its start as Riata Energy in 1984 by Malone Mitchell, III. The company grew to become the largest privately held land driller in the U.S., and in early 2006, filed for an initial public offering.

"The IPO was canceled when Mitchell sold more than half of his stake to Ward, who re-named the company and filed once again for an IPO. Mitchell is no longer involved with SandRidge, but he continues to hold a 12.2% stake. Other major shareholders include private equity firm Ares Management and hedge funds Lone Pine Capital and Farallon Capital

"Shares of SandRidge are up more than 37% year to date and nearly 90% from the company's IPO price. The stock closed at $32.00 on its first day out of the gate. The stock fell to a low of $28.50 on January 22nd, but hit a fresh 52-week high of $53 recently.

"SandRidge announced 1Q '08 results on May 8th. The company's operating cash flow rose 204% to $143.3 million and adjusted EBITDA improved 143% to $167.6 million. Revenues grew by 81% to $269.9 million, easily beating the $217.8 million consensus. Natural gas and crude oil production grew 78%.

"When an insider with substantial holdings is buying when the stock price is strong, it indicates he or she thinks the stock has long-term value. When the insider has the track record Ward does, it's a pretty positive long-term signal for the stock."

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Newspaper wrap-up: United Airlines puts US Airways on hold, talks to Continental

Laurie Pasternack — 2008-05-30T08:00:00+00:00

Filed under: Newspapers, Magazines, Apple Inc (AAPL), Chesapeake Energy (CHK), US Airways Group (LCC), Contl Airlines'B' (CAL), UAL Corp (UAUA), General Dynamics Corp (GD), Northrop Grumman (NOC)

MAJOR PAPERS:

Merger talks between UAL Corporation's (NASDAQ: UAUA) United Airlines and US Airways Group Inc (NYSE: LCC) have been put off for now, the Wall Street Journal reported. United is reportedly close to an alliance with Continental Airlines Inc (NYSE: CAL).
Harris Corporation (NYSE: HRS) is for sale and the company has begun to hear from interested parties, the Wall Street Journal also reported. Harris is looking for $75 to $80 per share. Speculation about the bidders includes General Dynamics Corporation (NYSE: GD) and Northrop Grumman Corporation (NYSE: NOC).

OTHER PAPERS:

The Charleston Gazette reported that Chesapeake Energy Corporation (NYSE: CHK) has decided not to build its Eastern Division headquarters in Charleston, West Virginia in the wake of a West Virginia Supreme Court ruling on May 22.

WEB SITES:

AppleInsider reported that Apple Inc (NASDAQ: AAPL) is expected to announce a back-to-school deal soon that will encourage students to buy new Macs by offering some of the largest incentives in the history of the company.

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Cramer on BloggingStocks: Oil's not the widespread tax it used to be

Jim Cramer — 2008-05-19T09:22:00+00:00

Filed under: General Electric (GE), Exxon Mobil (XOM), Market matters, Halliburton (HAL), Schlumberger Limited (SLB), Alcoa Inc (AA), Archer-Daniels-Midland (ADM), Bank of America (BAC), Boeing Co (BA), Chesapeake Energy (CHK), Chevron Corp (CVX), duPont(E.I.)deNemours (DD), Office Depot (ODP), Deere and Co (DE), Honeywell Intl (HON), United Technologies (UTX), Eaton Corp (ETN), Anadarko Petroleum (APC), Oil, Stocks to Buy, Burlington Northern Santa Fe (BNI), Norfolk Southern Corp. (NSC), Union Pacific Corporation (UNP), Cramer on BloggingStocks, Potash Corp. of Saskatchewan (POT)

TheStreet.com's Jim Cramer says lots of companies now thrive with crude up here.

Oil's not a tax on everything -- it's a tax on the consumer. That's what I come down to when I see the charts this weekend and ponder what's happening in so much of industrial America.

Company after company that I examine -- the new techs, as I call them -- actually benefit from higher oil prices. Or they can pass them on with ease, because of the worldwide demand being so strong.

Take all of the companies involved with making a Boeing (NYSE: BA) (Cramer's Take): Boeing itself, Alcoa (NYSE: AA) (Cramer's Take), Honeywell (NYSE: HON) (Cramer's Take) and Precision Castparts (NYSE: PCP) (Cramer's Take) being good examples. Each of these is necessary because the new Dreamliner burns lots less fuel, and with fuel the biggest airline cost, it stands to reason that higher energy prices make the plane more desirable even at a higher price point.

Or how about all of the companies involved with process and flow control and efficient motors: Parker-Hannifin (NYSE: PH) (Cramer's Take), Emerson (NYSE: EMR) (Cramer's Take), Eaton (NYSE: ETN) (Cramer's Take) and Flowserve (NYSE: FLS) (Cramer's Take). Those work higher with higher energy prices. CSX (NYSE: CSX) (Cramer's Take), Burlington Northern (NYSE: BNI) (Cramer's Take), Kansas City Southern (NYSE: KSU) (Cramer's Take), Union Pacific (NYSE: UNP) (Cramer's Take) and Norfolk Southern (NYSE: NSC) (Cramer's Take) are smaller energy users than trucks, and they ship plenty of ethanol and fertilizer.

Of course everything farming: Deere (NYSE: DE) (Cramer's Take), Monsanto (NYSE: MON) (Cramer's Take), Du Pont (NYSE: DD) (Cramer's Take), AGCO (NYSE: AG) (Cramer's Take), Potash (NYSE: POT) (Cramer's Take), Agrium (NYSE: AGU) (Cramer's Take), Mosaic (NYSE: MOS) (Cramer's Take) and Archer Daniels (NYSE: ADM) (Cramer's Take) (these are big companies in market cap now, powers of the S&P or companies just waiting to get into the S&P but stalled by a lack of mergers). And everything that drills, ships and transports oil and gas: Rowan (NYSE: RDC) (Cramer's Take), Parker (NYSE: PKD) (Cramer's Take), Weatherford (NYSE: WFT) (Cramer's Take), Cameron (NYSE: CAM) (Cramer's Take), Noble (NYSE: NE) (Cramer's Take), Transocean (NYSE: RIG) (Cramer's Take), FMC Tech (NYSE: FTI) (Cramer's Take), Oceaneering (NYSE: OII) (Cramer's Take) and so many others -- and of course, Halliburton (NYSE: HAL) (Cramer's Take) and Schlumberger (NYSE: SLB) (Cramer's Take).

And then there is oil and gas itself, ever a larger portion of the S&P. Look at the charts during last week's run: Apache (NYSE: APA) (Cramer's Take), Anadarko (NYSE: APC) (Cramer's Take), Nabors (NYSE: NBR) (Cramer's Take), Exxon (NYSE: XOM) (Cramer's Take), Chevron (NYSE: CVX) (Cramer's Take), Occidental (NYSE: OXY) (Cramer's Take), XTO (NYSE: XTO) (Cramer's Take), Southwestern (NYSE: SWN) (Cramer's Take), Chesapeake (NYSE: CHK) (Cramer's Take), Ultra (NYSE: UPL) (Cramer's Take): these all count.

Coal, of course, is a huge beneficiary. Infrastructure works because these companies get the benefits of the oil companies' largesse by being able to build energy-related production centers.

Even the autos can be viewed as benefitting, as the newer cars use less gas than the old ones, making them viable alternatives in multiyear paybacks. Along those lines, energy-efficient appliances get a boost.

Then there are the myriad energy-alternative plays that are always dominating the headlines but haven't yet made it into the S&P or are very small parts of the S&P: the wind plays -- Trinity (NYSE: TRN) (Cramer's Take), Woodward Governor (NASDAQ: WGOV) (Cramer's Take), Owens Corning (NYSE: OC) (Cramer's Take) (also insulation); solar -- First Solar (NASDAQ: FSLR) (Cramer's Take) ($24 billion market cap), SunPower (NASDAQ: SPWR) (Cramer's Take), and all the Chinese plays that people love so much.

Pipelines galore: Kinder Morgan (NYSE: KMP) (Cramer's Take), Enterprise (NYSE: EPD) (Cramer's Take), Boardwalk (NYSE: BWP) (Cramer's Take), so many others.

Many companies are neutral -- financial, telco, utilities -- although some benefit from the price umbrella of higher oil costs and can pass on costs they don't have. Tech's been fairly neutral. The weaknesses we have seen in tech are related to consumer slowdown (customers such as Office Depot (NYSE: ODP) (Cramer's Take)) or financial. Media's neutral, too. Health care can't be considered a negative either when it comes to energy consumption.

Most of the conglomerates say they are energy-positive: United Tech (NYSE: UTX) (Cramer's Take) and, famously, GE (NYSE: GE) (Cramer's Take), which has said that its fortunes should improve as oil goes higher, although we haven't seen that yet.

We know there are plenty that don't. Anything that is sold in the supermarket. Anything retail. Anything that uses oil or natural gas and can't really pass it on: Minerals and mining (although global demand really helps), glass (although recycling really helps, as in the case of Owens-Illinois (NYSE: OI) (Cramer's Take)), and chemicals and the paper producers.

But those companies aren't that important anymore, even though they dominate the consciousness of the marketplace, despite the encroachment of energy as a part of the S&P 500.

In fact, if finance could turn itself around -- something that seems increasingly possible, although it has sucked up a huge amount of capital and done nothing -- you could argue that we are on the cusp of a major move as it dawns on people that energy isn't the tax it used to be.

There are plenty of 30,000-foot flaws to this. We have seen time and again that our own growth in this country is heavily consumer-related. But the industrial growth owes itself not to the U.S. consumer, but the worldwide consumer.

All of these facts can go far toward explaining how higher oil prices have not been able to block the advance of the S&P or the Dow Jones averages. In fact, if the latter were more responsive to energy -- the Chevron nod was accompanied by ne'er-do-well Bank of America (NYSE: BAC) (Cramer's Take) instead of a Deere or another oil play like an Occidental or a Schlumberger -- we would be taking out 13,000 with ease.

All of this is worth thinking about when you are gloomy, because it doesn't add up to a decline, it explains the advance.

Keep it in mind during the next downturn. It explains a lot why they've been fairly shallow.

And I don't expect anything deeper now that finance seems to have stabilized.

RELATED LINKS:

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long XTO and Owens-Illinois.

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Option Update: Chesapeake Energy volatility elevated; shares near record high

Paul Foster — 2008-05-15T09:45:00+00:00

Filed under: Chesapeake Energy (CHK), Options

Chesapeake Energy (NYSE: CHK) is the largest independent and third-largest overall producer of natural gas in the U.S.

Bloomberg reports Natural Gas Futures are up 0.20% to 11.621.

CHK option implied volatility of 40 is above its 26-week average of 32 according to Track Data, suggesting larger price movement.

NASDAQ 100-QQQQ overall implied volatility at 24; 26-week average is 28

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Cramer on BloggingStocks: Anadarko shines in good company

Jim Cramer — 2008-05-07T09:05:00+00:00

Filed under: Cisco Systems (CSCO), Exxon Mobil (XOM), Market matters, Walt Disney (DIS), Chesapeake Energy (CHK), Anadarko Petroleum (APC), Stocks to Buy, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says natural gas producers are having a great year, and Anadarko may be the best of the bunch.

Marcellus Shale. Ghana. Brazil. Wherever the oil and gas is. Wherever the chances to boost output.

That's Anadarko (NYSE: APC) (Cramer's Take).

Fifteen percent growth or higher for many years. That's Anadarko.

Creating value for shareholders. That's Anadarko.

IPO of Western Gas. That's Anadarko.

And more important, it is not ExxonMobil (NYSE: XOM) (Cramer's Take).

Anadarko is one of six companies, including Apache (NYSE: APA) (Cramer's Take), Southwestern (NYSE: SWN) (Cramer's Take), XTO Energy (NYSE: XTO) (Cramer's Take), Chesapeake (NYSE: CHK) (Cramer's Take) and Devon (NYSE: DVN) (Cramer's Take) (El Paso (NYSE: EP) (Cramer's Take) is threatening to join them!) that are believers.

These companies recognize that natural gas is the fuel of the future, the cleanest of the logical baseline (non-peak, everyday worker energy) fuels -- coal, oil and natural gas. These companies know what a joke ethanol is. They know that the politicians are more focused on clean renewables that use more energy than they make.

I am adamant that this is the year of natural gas. And I simply won't stop. These producers, and those who drill for natural gas, are electric.

They are the best place to be.

Random musings: Disney (NYSE: DIS) (Cramer's Take) and Cisco (NASDAQ: CSCO) (Cramer's Take) are clean, although later against lowered expectations. ... Oh, and Ultra Petroleum (NYSE: UPL) (Cramer's Take) after the close -- beautiful number. Beautiful.

RELATED LINKS:

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Earnings highlights: Exxon, GM, Time Warner, Starbucks, P&G, ADM and others

Trey Thoelcke — 2008-05-03T10:10:00+00:00

Filed under: Earnings reports, Time Warner (TWX), Starbucks (SBUX), General Motors (GM), Exxon Mobil (XOM), Archer-Daniels-Midland (ADM), Chesapeake Energy (CHK), Kellogg Co (K), Colgate-Palmolive (CL), Corning Inc (GLW), Procter and Gamble (PG), Under Armour'A' (UA), Duke Energy (DUK), Burger King Hldgs (BKC), Valero Energy (VLO), Kraft Foods'A' (KFT), Time Warner Cable (TWC), Garmin Ltd (GRMN)

Here are some highlights from this past week's earnings coverage from BloggingStocks:

Archer Daniels Midland Co. (NYSE: ADM) Q3 profits soared, beating analysts' expectations.
Buffalo Wild Wings Inc. (NASDAQ: BWLD) strong Q1 results met analysts' expectations.
Burger King Holdings Inc. (NYSE: BKC) reported solid Q3 results that beat Wall Street estimates.
Chesapeake Energy Corp. (NYSE: CHK) beat expectations for the first quarter, sending shares up.
Colgate-Palmolive Co. (NYSE: CL) posted better-than-expected Q1 results on the weak dollar.
Corning Inc. (NYSE: GLW) beat earnings expectations and raised its guidance.
Corn Products International (NYSE: CPO) posted record sales for the ninth consecutive quarter.
Duke Energy Corp. (NYSE: DUK) Q1 profits met expectations but revenues beat them.
ExxonMobil Corp. (NYSE: XOM) missed Q1 expectations due to narrower margins.
Garmin Ltd. (NYSE: GRMN) reported lower-than-expected earnings due to slowed demand.
General Motors Corp. (NYSE: GM) posted a smaller-than-expected loss for the first quarter.
Herbalife Ltd. (NASDAQ: HLF) posted Q1 results and announced the resignation of the president and COO.
Kellogg Co. (NYSE: K) beat Q1 expectations and announced a 10% dividend increase.
Kraft Foods Inc. (NYSE: KFT) Q1 profits declined but beat analysts' expectations.
Procter & Gamble Co. (NYSE: PG) reported better-than-expected Q1 results and raised its 2008 outlook.

Starbucks Corp. (NASDAQ: SBUX) posted weak Q2 earnings in line with Wall Street expectations.
Time Warner Cable Inc. (NYSE: TWC) beat Q1 expectations and reaffirmed its guidance.
Time Warner Inc. (NYSE: TWX) posted solid Q1 results and announced a spin-off of TWC.
Under Armour Inc. (NYSE: UA) beat Q1 expectations but lowered its full-year outlook.
Valero Energy Corp. (NYSE: VLO) blew past Q1 EPS expectations despite despite profits plunging 77%.

Also, Jim Cramer lauds Procter & Gamble for its success in these tough times and Colgate-Palmolive for bouncing back after taking a hit. And Time Warner investors may have been looking for more than they got in the quarterly report.

Upcoming results to watch for include Anadarko Petroleum (NYSE: APC), Cisco Systems (NASDAQ: CSCO), Fannie Mae (NYSE: FNM), Molson Coors (NYSE: TAP), Walt Disney Company (NYSE: DIS), and American International Group (NYSE: AIG).

Visit AOL Money & Finance for more earnings coverage.

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Chesapeake Energy (CHK) soars on Q1 earnings

Brent Archer — 2008-05-02T13:20:00+00:00

Filed under: Major movement, Earnings reports, Good news, Industry, Chesapeake Energy (CHK), Options, Technical Analysis, Oil

Chesapeake Energy (NYSE: CHK) shares are trading higher after CHK reported a first-quarter loss of $132 million, or 29 cents per share, last night. However, CHK shares are rising today, as the company's adjusted profit came to $561 million, or $1.09 per share, beating analyst estimates of 93 cents per share. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CHK.

After hitting a one-year low of $31.38 in August, the stock hit a one-year high of $55.00 last week. CHK opened this morning at $51.82. So far today the stock has hit a low of $50.70 and a high of $52.82. As of 12:35, CHK is trading at $52.67, up $1.73 (3.4%). The chart for CHK looks bullish and steady, while S&P gives the stock a bullish 4 Stars (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $45 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just seven weeks as long as CHK is above $45 at June expiration. Chesapeake would have to fall by more than 33% before we would start to lose money. Learn more about this type of trade here.

CHK hasn't been below $45 by more than a few cents since February, and has shown support around $50 recently. This trade could be risky if the price of oil and other energy commodities drops off in the coming months, but even if that happens, this trade could be protected by support CHK might find at its 50 day moving average, which is currently around $42.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CHK.

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Cramer on BloggingStocks: Nat gas dip was profit-taking, nothing more

Jim Cramer — 2008-04-28T09:05:00+00:00

Filed under: Market matters, Chesapeake Energy (CHK), Wrigley, (Wm) Jr (WWY), Anadarko Petroleum (APC), Oil, Stocks to Buy, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says it's not a strong-dollar sell -- the story here is still too good.

Why did natural gas go down last week? What was that? Inventories were down. The commodity price was up. The fuel itself is green. It is better than ethanol and it is being used to fuel an increasing numbers of cars and trucks.

The whole move down had to have been triggered by something, right? Yeah, how about the fact that the stocks were up a lot and were due for some profit-taking.

Recall that the real "reason" they went down is that the dollar "got strong," and that was supposed to trigger commodity deflation; natural gas is a commodity and is therefore going to go down. (Barron's made this very case this weekend, oblivious to the facts, but loving the theory.)

This kind of thinking is just so stupid that it shows you can get chance after chance after chance to own the fuel that can take care of the nation if we just let it. Of course, the stocks began to come back later in the week as threats of supply cut-offs of crude -- they came true this weekend -- made natural gas declines virtually impossible, despite the "sense" that it peaked. So the money has came back and I believe will continue to come back.

Now, to recap, the quarters that were the best, besides Southwestern (NYSE: SWN) (Cramer's Take) on Friday, were Apache (NYSE: APA) (Cramer's Take) and XTO (NYSE: XTO) (Cramer's Take). Chesapeake's (NYSE: CHK) (Cramer's Take) cheap. I like Andarko (NYSE: APC) (Cramer's Take), too. Questar (NYSE: STR) (Cramer's Take) and Ultra (NYSE: UPL) (Cramer's Take) should not be overlooked, even though they were on fire Friday. Don't forget that Nabors (NYSE: NBR) (Cramer's Take) is the best drilling play for nat gas, too.

Can this rally continue? Why not? We have more natural gas, it can't be imported cheaply, the transportation of it is improving and the stuff's widely abundant from South Dakota to Pennsylvania (Marcellus Shale).

So, the "strong dollar/sell nat gas" trade is over.

Not too late to start buying again.

Random musings: Buffett's supposed to buy cheap. Wrigley's (NYSE: WWY) (Cramer's Take) is perhaps the most expensive packaged-goods company trading. No matter. I bet we hear how cheap it is all day.

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'Unconventional' gains in natural gas

Steven Halpern — 2008-04-23T15:33:00+00:00

Filed under: Newsletters, Chesapeake Energy (CHK), Commodities, Oil, Stocks to Buy

"After coal, natural gas is the No. 2 source for power generation; and the largest source of gas production in the US is now unconventional reserves," explains Neil George.

In his Personal Finance newsletter, the advisor looks at two favorites plays on this trend: Chesapeake Energy (NYSE: CHK) and XTO Energy (NYSE: XTO). Here is his review.

"Unconventional reserves now account for close to 40% of all domestic gas production. In addition, with the possible exception of deepwater fields, unconventional production is the only domestic source of gas that's likely to show real growth in coming years.

"The term 'unconventional' refers to any gas field that can't be produced economically using traditional well technologies. But, using a combination of new techniques, wells drilled in unconventional fields are prolific producers. US natural gas producers remain on a 17%-plus tear in gains so far this year.

"Chesapeake Energy is heavily leveraged to one of the most exciting unconventional plays of all, the Barnett Shale play located near Fort Worth, Texas.

"During the weaker gas price environment of the past two years, Chesapeake has been building a large acreage in the region. That investment is now paying off in the form of accelerating gas production growth at a time when gas prices are rising.

"Production surged 34% in the fourth quarter over the same quarter in 2006. And Chesapeake's proven reserves jumped 21% year-over-year.

"As Chesapeake accelerates its drilling activity, it will gradually be able to book more reserves as proven; management believes it could add as much as 2 trillion cubic feet in new reserves annually for the next few years. Buy Chesapeake Energy under 55.

"Like Chesapeake, XTO Energy has a strong position in the Barnett Shale play; XTO reported growth of 25% over the same quarter last year from Barnett.

"The company is relatively new to that region, entering Barnett only in 2004. But production growth has remained consistent since it started producing from the region, and XTO now has an impressive 250,000-acre position in the core of this hot region.

"XTO has also been an aggressive acquirer in recent years. And by drilling more aggressively, the company should be able to boost production at many of the properties it bought from utility Dominion Resources. XTO Energy rates a buy under 70."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

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Chesapeake Energy: A gusher?

Tom Taulli — 2008-03-25T14:40:00+00:00

Filed under: Chesapeake Energy (CHK)

It's been a big day for Chesapeake Energy Corp. (NYSE: CHK). The company said that it has made a big gas discovery in Shreveport, Louisiana, which could have material impact on its output. The reserves could amount to 20 trillion cubic feet, and Chesapeake is pumping up its capital expenditures by $275 million this year and $675 million in 2009.

No doubt, the expectation is that there will be some serious needs for energy, despite the recent slowdown in the US economy. It certainly helps that natural gas prices have been particularly strong. And, for the most part, natural gas is critical for basic needs, such as electricity and heating. Oh, and it tends to be cleaner.

On CNBC today, energy tycoon T. Boone Pickens said that he owns Chesapeake's stock (and yes, he had some nice things to say about the company). He also thinks that oil will remain above $100 per barrel for the second half of the year.

In today's trading, Chesapeake's stock price is up 3% to $46.45.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Analyst downgrades: ETFC, SBIB and RIMM

Eric Buscemi — 2007-12-03T11:16:00+00:00

Filed under: Analyst upgrades and downgrades, Chesapeake Energy (CHK), Research in Motion (RIMM), UAL Corp (UAUA), Johnson Controls (JCI)

MOST NOTEWORTHY: E-Trade, Sterling Bancshares and Research in Motion and were today's noteworthy downgrades:

Bank of America downgraded shares of E-Trade (NASDAQ: ETFC) to Sell from Neutral, as they no longer believe the value of the company's retail brokerage business can offset negative value at the bank.
Sterling Bancshares (NASDAQ: SBIB) was downgraded to Neutral from Outperform at Baird on valuation.
Morgan Keegan lowered its rating on Research in Motion (NASDAQ: RIMM) to Market Perform from Outperform, and believes the 8000 series upgrade cycle will likely slow and that share performance will be impacted by expectations of a slowing economy..

OTHER DOWNGRADES:

UAL Corp. (NASDAQ: UAUA) and Johnson Controls (NYSE: JCI) were downgraded to Equal Weight from Overweight at Lehman.
Chesapeake (NYSE: CHK) was lowered to Equal Weight from Overweight at Morgan Stanley.

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Holiday shopping? Buy stocks, not clothes: Didn't make the cut

Sheldon Liber — 2007-11-30T19:04:00+00:00

Filed under: Chesapeake Energy (CHK), Lockheed Martin (LMT), BHP Billiton Ltd ADR (BHP)

Eight for 2008:
Still on the short list:

Stocks that did not make the cut:

Lockheed Martin (NYSE: LMT) has a low P/S but a high price to book of 6, which I will have to explore. However, if you need a satellite or a fighter, who are you going to call? This is a very profitable company on a lot of peoples list of quality stocks. However, it seems that all the good news is priced into the stock. It has an average P/E and I have a hard time swallowing the price to book. I also think world wide, government spending is going to favor helicopters more than fighters going forward. I really have nothing bad to say about Lockheed, it's just not a standout and I think that Raytheon will have better prospects. Perhaps I would feel different if I anticipated greater spending on space exploration but that too has been cut over the years.
BHP Billiton Limited (ADR) (NYSE: BHP) made an unsolicited offer to buy Rio Tinto plc (ADR) (NYSE: RTP) earlier in the week, and is looking to grow more dominant in mining and raw materials. What it is thinking about the global opportunity is the same reason I have included it on my shopping list. I think the M&A story makes me want to put this one on hold. There are too many ways this could be played out and too much is happening behind the scenes for me to consider it as a value play at this time.
Chesapeake Energy Corporation (NYSE: CHK) is a big player in the North American gas exploration and production market. It is floating about halfway between its 52-week high and low. Gas prices are significantly down from the highs of a couple of years ago. Another mild winter seems to be shaping up, but any chilling in the temperature or increases in demand from electric utilities could send this stock back to its highs and beyond. From where I sit the mild winter is here, oil prices will soften, demand will level off for a while and there does not seem to be any shortages of natural gas. The stock had a great run in 2007. I do not know if it is sustainable. Most of its metrics say it is still a value but I favor the predictability of the utilities next year over the explorers.

Somewhere along the journey I am sure to gather some "egg on my face" but for now we boldly go forward and with the addition of two stocks and the deletion of three we stand at 15 possibilities. The process will continue with further updates throughout the shopping season until there are only eight for 2008. I view all 15 of these companies worthy of consideration, so I expect it will come down to the greatest value on the given day... as it should.

To find potential opportunities and verify my track record, read Chasing Value or Serious Money.

DISCLOSURE: I currently own shares of BRK.A, ISRG, HNP, DOW, DUK, VLO, GD, APC, and AAUK.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

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