Callon Petroleum (CPE) Stock: Bullish Short Term, Bullish Long Term

Traders could consider going long Callon Petroleum (CPE) here and adding to longs on a close above $9.50.
By Bruce Kamich ,

NEW YORK (TheStreet) -- Drilling down, we found the chart of Callon Petroleum Co. (CPE) - Get Report interesting with a bullish short-term and long-term picture.

In this short-term view of CPE, above, we can see that it made a low in late July. CPE has made higher lows with the same highs in the $9.00 to $9.50 area. Prices are above the 50-day and 200-day simple moving averages, and both averages are trending up.

This chart, above, shows CPE above the 40-week average and a strongly rising On-Balance-Volume (OBV) line with a positive Moving Average Convergence Divergence (MACD) oscillator.

This long-term chart of CPE, above, shows a seven-year base for CPE with a strongly rising OBV line. A breakout over $12 will complete the formation and signal what should be a significant markup.

Traders could consider going long CPE here and adding to longs on a close above $9.50. Use a sell-stop below $8.

TheStreet Ratings team rates CALLON PETROLEUM CO/DE as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate CALLON PETROLEUM CO/DE (CPE) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, CPE's share price has jumped by 41.09%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Net operating cash flow has increased to $25.55 million or 15.59% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -26.28%.
  • Despite the weak revenue results, CPE has outperformed against the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 13.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The debt-to-equity ratio of 1.09 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.45, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CALLON PETROLEUM CO/DE's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: CPE

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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