
Buy These Oil Stocks on the Next Pullback
NEW YORK (TheStreet) -- Oil and oil stocks have staged fantastic gains in the last two weeks, but investors want to know if this is the start of a sustainable trend or if it's time instead to sell these short-term winners. I maintain that oil stocks will be by far the best sector investment in 2016, but there are several indications that they (and crude prices) are primed to at least take a break from their recent climbs.
I've been clear that I thought that oil was bound by a range that doesn't go much under $40 a barrel or much above $50 for the next few quarters, and so far, that's exactly how things have played out in the market. So even though I'm convinced that oil won't go down much again, there are other restraints on oil rising much higher than it is right now -- at least in the short term.
An avalanche of commercial selling from oil producers in the futures markets has emerged as prices rose to near $50 a barrel, putting a lid on the rally. In addition, banks' redeterminations of shale oil companies' credit lines are about over, and most of the banks have been reluctant to close down credit lines and force restructurings. This is permitting many of even the most marginal producers to continue to pump. The newly inked crude oil export ban repeal bill that was approved by Congress last week will also add to the pressure on oil -- opening up new markets for U.S. crude oil gives domestic producers another reason to keep fracking.
But an oil market that doesn't immediately trend bullishly doesn't mean that there are no values in underlying oil stocks. In the last two weeks, several of my favorite oil stocks slumped to fantastic value levels -- prices that made it worthwhile to open fresh positions for the long haul. These companies include ExxonMobil (XOM) - Get Report , EOG Resources (EOG) - Get Report , Cimarex (XEC) - Get Report and Kinder Morgan (KMI) - Get Report . Now that they have all significantly rallied, investors need to be on the lookout for any moderate pullbacks, so that they can again find these shares at value prices.
I recorded a video with Jim Cramer that talks about all of these stocks and the targets you should look for. Check it out.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.








