Markets

Bull of the Day: Pioneer Energy (PES) - Bull of the Day

Tough market yesterday. The Russell 2000 held at the February 5 th low of 1082 and caught a strong bid higher. At the same time the Russell held, the S&P 500 found support down at the 1864 level as well. In the aftermath of what had been an egregious sell-off in the morning I found myself tiptoeing through the daisies in the afternoon, looking for buying opportunities.

With my sleeves rolled up and my Research Wizard running, I dug in to look for a stock idea to stand in and buy in the face of this volatility. I wanted to find a stock with a great earnings story that has been outpacing this market and is in a strong sector. That's exactly what I found with today's Bull of the Day, Pioneer Energy ( PES ).

Pioneer is a Zacks Rank #1 (Strong Buy) in the Oil and Gas drilling services industry that ranks in the top 19% of our Zacks Industry Rank. The company provides contract land drilling services to independent and major oil and gas exploration and production company. Production services include well servicing, wireline, coiled tubing, and rental services. Pioneer has a fleet of over 60 electric and high-end mechanical drilling rigs throughout onshore oil and gas producing regions in the US and Colombia.

Last quarter, analysts were expecting a 4 cents a share loss for Pioneer. Then for the fourth quarter in a row Pioneer surprised to the upside and ended up posting a 4 cents per share gain. Analysts began to revise their forecasts for PES, raising the consensus for the current year from 4 cents to 19 cents per share and next year from 16 cents to 43 cents per share. A big reason for this has been the boom in the Bakken and business picking up in the Permian basin as well.

The technical chart follows the same strong pattern as the earnings picture. The stock has risen dramatically over the course of the last year, but that's to be expected if you look at the huge increases in EPS estimates. The current uptrend has been supported all along by the 25 day moving average offset by 5 days (25x5). The last time price dipped below the 25x5 was in February around the same time that the Russell 2000 was at its lows.

Now the stock sees price action just above a positively sloped 25x5. The recent pullback from the highs above $15 present a timely opportunity to load the boat. The stochastics have been overbought for several months but that is to be expected from a stock that's been on a huge run like Pioneer energy has. Currently the support sits at the 25x5 at $13.79 while the first upside target sits near $15.50. Thursday's intraday bounce in the Russell 2000 and in PES should be very encouraging for stock traders looking to pick up some PES on sale this morning.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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