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Buying an Energy Name

The group is down on today's higher inventories, but the fundamentals in this name are too good to pass up.
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I am going to buy another 100 shares of Cabot Oil & Gas COG. Oil and natural gas prices are down today, and the energy index is off 1.2%. Sentiment has shifted in the short term on the sector because the oil inventory numbers showed an 800,000 increase in inventories this morning.

I am still a believer in the group; Cabot has now sold off to below its secondary offering price, and I want to take advantage to build my position. This is a diversified E&P company that has recently increased its exposure to the high-growth areas of the Haynesville and Marcellus Shales. It has an excellent track record of discoveries and is going to benefit from horizontal drilling technology. The production growth of 12% is conservative and its cost structure is very low.

The stock has corrected from its recent high of $72, and I think this is a good time to buy more. I believe the long- term trends are positive for oil and natural gas because global demand remains quite strong. My position will be 3.4% after my purchase.

Regards,

Jim Cramer

DISCLOSURE: At the time of publication, Cramer was long COG.

Send email to james.cramer@thestreet.com.