Power Stocks Lose Their Juice

Four Undervalued Stocks

Are there any cheap stocks in these sectors given this weakness? I set my screens on the energy and public utilities sectors to identify companies within these sectors that have cheapened enough to become at least 40% undervalued according to my model. Three energy stocks and one utility passed this test, but all four have negative weekly chart profiles.

I emphasize my valuations here because there are only four stocks in the energy and public utilities sector that trade above $5 per share and are at least 40% undervalued. Given the negative technicals in the sector, buying any of these stocks is not a sure thing, but it is a way that traders can try to capture a rebound. My model suggests that investors should look at their portfolios carefully and be prepared to reduce holdings on strength, as energy and public utilities are unlikely to power your portfolios going into the end of the third quarter as well as they have in the past.

At 49.0% undervalued, El Paso(EP Quote) is the most undervalued of the group, with fair value at $22.43. Its weekly chart profile is negative, with the stock trading below both its five-week modified moving average at $12.29 and its 200-week simple moving average at $12.68. I show risk to my quarterly value level at $11.05, where my model suggests buyers should emerge. Below that is the 52-week low at $8.59.

Valero Energy(VLO Quote) is slightly less extreme, at 42.6% undervalued, making its fair value $164.95. The weekly chart profile is negative with the five-week MMA at $101.56. I show risk to my quarterly value level at $84.08, where buyers should emerge.

National Fuel Gas(NFG Quote) is 41.4% undervalued, making fair value $51.39. The weekly chart profile is negative with the five-week MMA at $31.33. I show risk to my quarterly value level at $28.45, where my model suggests buyers should emerge.

Least undervalued is Quicksilver Resources(KWK Quote), which is 40.3% below its fair value of $60.76. Its weekly chart profile is also negative, with the five-week MMA at $41.26. There's risk to my semiannual value level at $32.52, where my model suggests buyers should emerge.