Every day I scan the market looking for great opportunities to buy fantastic companies and precisely the right time. I look for stocks that are Zacks Rank #1 (Strong Buy) with recent earnings revisions to the upside, a recent quarterly earnings surprise, and relative strength to the market. Anyone can run this screen and uncover some solid stock ideas. I love running the screen daily because it helps me uncover trends in the market that would usually go unnoticed. Based on the sectors of the stocks that keep popping up on a daily basis I get a good pulse for which parts of the market are hot. What’s been popping up a lot for me lately has been the energy space. Oil and Nat Gas are looking very good right now.
Looking even better is today’s Bull of the Day, Exterran Holdings (EXH). Exterran is the global leader in full service natural gas compression. Think about the big energy boom we’re having in the US. At the forefront is the debate of whether or not we’ll allow the exportation of Nat Gas as we’re getting it for about a quarter of what they pay in Asia and half what they do in Europe. Compressing the Nat Gas would allow for easier transportation not just domestically but also potentially internationally.
EXH just reported earnings yesterday so we’ve got some fresh news to be excited about. Earnings came in at 18 cents per share for the quarter versus expectations for 14 cents. This marked the 9th time EXH has surprised to the upside in the last 10 quarters. Like most stocks, this one loves an earnings beat. The consistent positive revisions also have helped guide EXH on a steady upward trajectory. The price and consensus chart does a great job of putting these revisions in an easy to view format for us. Look at that up and to the right pattern we’re seeing.
From a technical standpoint we are at a critical juncture here. First, you’ve got a stock that was trading below $27 last October that just hit a fresh high close to $46 the other day. The last breather EXH took saw it park itself below the 25 day moving average offset by 5 days for a brief period of time. This recent pullback found support north of any Fibonacci support off the range and was buoyed near the early March high.
It was at this point just a few short days ago where EXH caught a bid as the stochastics flashed an extremely oversold condition. Ahead of a bullish stochastic cross we’ve seen the stock react very positively to the recent earnings report. Now it looks a whole lot healthier. We are firmly above the 25x5 now and with yesterday’s news price action hit a new 52 week high. Today amongst a very tough market EXH was higher on the day yet still failed to take out yesterday’s high.
Given the abundance of volume at these price levels, I see the $42 level as strong support right now for EXH. Investors looking to peck a little at EXH could easily park a stop loss on the south side of $42 with an upside target of $50. Using the Zacks Rank and a little bit of technical analysis you can find super stock ideas like this every day.