This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Dicker and Link: Permian Momentum Oil Plays Seem Overpriced

NEW YORK (TheStreet) -- I was talking to Stephanie Link about the dedicated U.S. oil producers in the Permian basin and other red-hot shale plays. While these stocks are flying high with momentum, I am taking most of my money off the table on these after scoring double-digit gains on all of them.

I don't want to push all the U.S. producers in one category because there is still some long-term value in the names that have diversification in production. Names like EOG Resources (EOG) and Anadarko (APC) and Noble Energy (NBL) , although they are all committed to liquids production of U.S. shale plays, are still part of my portfolio as I continue to like the value of diversification in the patch.

But the massively directed plays in the Permian particularly, names like Pioneer Natural Resources (PXD) and Diamondback Energy (FANG) and even Cimarex (XEC) , a name I recommended highly at $92, have lost my love. I have now sold out of my holdings in these names entirely.

Several upgrades from the analysts at the major wire houses increase my nervousness with these names. I love buying stocks when they are out of favor with the analysts and investing long-term waiting for the world to figure out the value I think I've found. But when the majority of the public catches on and the targets from the analysts' reports start predicting lofty numbers, that is when I am likely to look elsewhere for a new opportunity.

Recently, I have been finding it in Canadian names that are concentrating on the increasing production of oil sands, like Canadian Natural Resources (CNQ) and Cenovus (CVE) or those Canadian exploration and production companies (E+P) that are concentrating in the "Canadian Bakken" or Torquay region, like Crescent Point Energy (CPG) or Vermillion Energy (VET) .

I talk more about the swap I've been doing to my energy portfolio with Stephanie in the video above.

At the time of publication the author had a position in APC. Action Alerts PLUS, of which Link is co-manager, also had a position in APC.

Follow @dan_dicker

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

>>Read more: Who Is Going to Buy Madison Square Garden?


TheStreet Ratings team rates EOG RESOURCES INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate EOG RESOURCES INC (EOG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, good cash flow from operations, solid stock price performance and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results." You can view the full analysis from the report here: EOG Ratings Report

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 25 years of oil trading experience. He is a licensed commodities trade adviser.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,031.14 +43.63 0.26%
S&P 500 1,984.13 -1.41 -0.07%
NASDAQ 4,518.9020 -48.6960 -1.07%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs