(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)
Oil continues its rise in 2018, with the commodity now up by nearly 20% on West Texas Intermediate (WTI) crude, currently trading at roughly $72.00 per barrel. Stocks like Marathon, Anadarko Petroleum Corp. (APC) and Noble Energy, Inc. (NBL) all up between 26 and 31% this year so far, benefiting from oil's strong performance. However, each of these three stocks are breaking out yet again, with the potential to rise by 12% or more in the coming weeks. (For more, see also: 9 Energy Stocks With 15% Upside: Goldman.)
Anadarko is nearing a potentially big break out level, with shares rising towards resistance around $73.30. If the stock can increase beyond that price than it could increase nearly 20.4% to $85, up from its price of about $70.50. Should the stock fail, then it has a support level and an upward sloping trend line around $64.50, about 8.5% lower. However, the relative strength index (RSI) has been trending higher since April of 2017, and even though it is at overbought levels with a reading above 70, it can continue rise. The RSI has reached these levels for the third time since 2017, but each time the stock hit the overbought level, it merely consolidated sideways, before resuming its upward trend.
Nobel Energy had broken out rising above a multi-year downtrend, when it crossed above $33 back on April 18. The breakout then retested the uptrend at the beginning of May, and the stock has increased to $37.50 since. The stock appears to have a clear path higher to $41.20, a rise of about 12% from its current price of $36.80, with no levels of strong resistance until then. The RSI is at the overbought level, around 70, which suggests the stock may consolidate before making its next move higher. (For more, see also: Here's 8 Energy Stocks to Power Your Portfolio in 2018.)
Marathon broke out at the beginning of May when its stock rose above a strong resistance level at $19.40. The stock has a clear path to continue to rise to roughly $25.40, about 18% higher than the stock's current price of about $21.50. Should the stock rise to $25.40, it would be the first time it has been there since July of 2015.
All three of these stocks look very well positioned to continue to rise over the coming weeks, should Oil prices continue to remain at current levels or climb higher.
Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.