{"id":108224,"date":"2017-06-29T10:44:02","date_gmt":"2017-06-29T14:44:02","guid":{"rendered":"http:\/\/countingpips.com\/?p=108224"},"modified":"2017-06-29T06:44:57","modified_gmt":"2017-06-29T10:44:57","slug":"oil-markets-dumpster-fire-claims-new-casualty","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/06\/oil-markets-dumpster-fire-claims-new-casualty\/","title":{"rendered":"Oil Market\u2019s Dumpster Fire Claims New Casualty"},"content":{"rendered":"<div id=\"inves-3503162124\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">June 29, 2017<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p>By <a href=\"http:\/\/WallStreetDaily.com\/\"><u>WallStreetDaily.com<\/u><\/a> <img loading=\"lazy\" decoding=\"async\" class=\"attachment-home-th size-home-th wp-post-image\" style=\"display: block; margin-bottom: 5px; clear: both;\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/06\/0617_oilmarket_feature.jpg\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" srcset=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/06\/0617_oilmarket_feature.jpg 580w, https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/06\/0617_oilmarket_feature-300x155.jpg 300w\" alt=\"Oil Market\u2019s Dumpster Fire Claims New Casualty\" width=\"580\" height=\"300\" \/><\/p>\n<ul>\n<li>Profits in the oil industry are going up in smoke.<\/li>\n<li>The carnage should only continue from here.<\/li>\n<li>Is this the best energy short of 2017?<\/li>\n<li><strong><a href=\"https:\/\/pro.agorafinancial.com\/m\/703307\" target=\"_blank\" rel=\"noopener\">Also recommended: When this signal hits, profits ALWAYS follow.<\/a><\/strong><\/li>\n<\/ul>\n<hr \/>\n<p><img decoding=\"async\" style=\"float: left; max-width: 85px;\" src=\"https:\/\/duip7hn7nchpo.cloudfront.net\/editor-circle-louis-basenese.jpg\" alt=\"Louis Basenese\" \/>After last week\u2019s descent for oil stocks, investors are licking their chops for these cheap issues.<\/p>\n<p>If you\u2019re one of these folks, I urge you to reconsider\u2026<\/p>\n<p><a href=\"https:\/\/www.wallstreetdaily.com\/2017\/06\/23\/friday-charts-amazon-oil-worlds-fastest-wireless-network\/\" target=\"_blank\" rel=\"noopener\"><strong>As I indicated last week<\/strong><\/a>, there will be much more pain before the gain here.<\/p>\n<p>But that doesn\u2019t mean we can\u2019t profit on the downside.<\/p>\n<p>In fact, senior analyst Jonathan Rodriguez serves up what could be one of sexiest energy shorts of the year below.<\/p><div id=\"inves-2844429282\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p>Ahead of the tape,<\/p>\n<p>Louis Basenese<br \/>\nChief Investment Strategist, <em>Wall Street Daily<\/em><\/p>\n<hr \/>\n<h2 class=\"centered headline\">Black Times for Black Gold<\/h2>\n<p><img decoding=\"async\" style=\"float: left; max-width: 85px;\" src=\"https:\/\/duip7hn7nchpo.cloudfront.net\/editor-circle-jonathan-rodriguez.jpg\" alt=\"Jonathan Rodriguez\" \/>To say that energy stocks have given investors a bumpy ride over the last few years would be major understatement.<\/p>\n<p>And just when things were starting to look good for oil this year, the floor gave way\u2026<\/p>\n<p>As you may know, after two years of record-high oil production intended to force out U.S. shale drillers, OPEC agreed to decrease their efforts last November \u2014 hoping to boost the flagging price.<\/p>\n<p>But the opposite actually occurred\u2026<\/p>\n<p>On rising U.S. production and stubbornly high inventory levels, front-month crude has fallen 15% since the start of the year \u2014 and right into a fresh bear market.<\/p>\n<p>In fact, this is the sixth bear market for oil in the last four years.<\/p>\n<p>And as a result, energy stocks have taken a nose dive in the last month.<\/p>\n<p>But as my colleague Louis pointed out last week, unless you\u2019ve got an iron stomach, loading up on oil names now isn\u2019t the best move.<\/p>\n<p>Yes, many of these stocks are cheap relative to the broader market. However, barring a major event overseas that disrupts production, oil will likely hover between $40 and $60 for the next several years.<\/p>\n<p>True, oil producers have gotten more efficient about getting the stuff out of the ground. Still, most of them won\u2019t see much of a profit at these prices.<\/p>\n<p>Even shale drillers, some of which can break even with oil at $45, will struggle under the weight of heavy debt loads.<\/p>\n<p>Add it all up and we\u2019re looking at some of the most compelling short plays on the market.<\/p>\n<p>Here\u2019s one such downside play to whet your appetite\u2026<\/p>\n<h2 class=\"subhead\">A Race to the Bottom<\/h2>\n<p><b>Cimarex Energy Co. (NYSE: XEC)<\/b> is a Denver-based oil and gas producer operating in the Southwest U.S.<\/p>\n<p>The company currently sports a market capitalization of $8.6 billion \u2014 down more than 30% from its all-time high in December.<\/p>\n<p>Over the last five years, Cimarex sales have fallen 6%, while the oil and gas industry grew 3% on average over the same period.<\/p>\n<p>While the company\u2019s sales are expected to rise 20% next year, its growth trails the industry\u2019s forecast top-line increase (29%) by 31%.<\/p>\n<p>Since 2012, the company has posted a 24% decline in earnings per share. That\u2019s nearly three times worse than the industry, which posted a 9% drop in that time.<\/p>\n<p>The company trades at 5.9 times trailing sales \u2014 twice the industry average (2.9).<\/p>\n<p>Cimarex also trades at four times its book value. That\u2019s a 76% premium to its five-year average (2.1) and more than double the industry average (1.7).<\/p>\n<p>Even more damning, shares trade at 17.9 times forward earnings \u2014 a whopping seven times the energy sector\u2019s P\/E (2.6) and a 28% premium to the oil and gas industry (14).<\/p>\n<p>Let\u2019s put the downside into perspective here\u2026<\/p>\n<p>Analysts expect Cimarex to earn $5.30 per share in fiscal 2017. Using the industry\u2019s forward earnings multiple (14), shares could fall by 20% in the next year.<\/p>\n<p>To capture a downward move, investors could simply short the shares. But to really ramp up returns, speculators might consider purchasing the December $95 puts, trading around $9.20.<\/p>\n<p>The put doubles in value with a drop in shares to $76.50, and would break even at $85.80 \u2014 a mere 7% below the stock\u2019s current price.<\/p>\n<p>Bottom line: Oil prices won\u2019t stay low forever, but they will challenge the profitability of producers for years to come. And Cimarex represents one of the most compelling short-term plays on the downside action.<\/p>\n<p>On the hunt,<\/p>\n<p>Jonathan Rodriguez<br \/>\nSenior Analyst, <i>The Wall Street Daily<\/i><\/p>\n<p>The post <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/06\/29\/oil-markets-dumpster-fire-claims-new-casualty\/\" rel=\"nofollow\">Oil Market\u2019s Dumpster Fire Claims New Casualty<\/a> appeared first on <a href=\"https:\/\/www.wallstreetdaily.com\" rel=\"nofollow\">Wall Street Daily<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By WallStreetDaily.com Profits in the oil industry are going up in smoke. The carnage should only continue from here. Is this the best energy short of 2017? Also recommended: When this signal hits, profits ALWAYS follow. After last week\u2019s descent for oil stocks, investors are licking their chops for these cheap issues. If you\u2019re one [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-108224","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108224","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=108224"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108224\/revisions"}],"predecessor-version":[{"id":108231,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108224\/revisions\/108231"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=108224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=108224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=108224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}