Monday, June 18, 2012

Natural Gas price Turnaround Opportunity to Add NBR


The rally in the futures has now fizzled, and we may have good entry opportunities for US equities at the open, which may allow for some good entry into equities tonight.

After my initial breakeven foray in natural gas using the ETF UNG I have decided that the natural gas with it's contango features would be best played using equities rather than ETFs to try and capture a recovery in natural gas prices.

Natural Gas looks like it has hit a decade long low, as it has pivoted at 2.00 and has now made a higher low, and decisively breaking the downtrend in recent weaks.  We've seen notable bottom callers, non more notable than billionaire Boone Pickens - http://pragcap.com/boone-pickens-natural-gas-has-bottomed



My pick would be to take a shot at NBR which has very good fundamental valuations and good liquidity - we'll see a great potential for reversal play here the next few months.

Consistent revenues, forward PE and price near historical lows we have a good candidate to add to the portfolio tonight.