Oil stocks have remained one of the few areas in the stock market that have held up well despite the market sell-off. But on Monday, even many of these firm lost a few percentage points or more as the major U.S. equity indexes fell 1% to as much as 3% each. Energy stocks led the downside amid the 11 S&P 500 sectors.
While this action isn't particularly encouraging, Ranger Oil, a leading IBD 50 stock, is still setting up a potential new base in orderly fashion.
The U.S. oil and gas exploration and production firm reported Q1 earnings last week with a powerful beat on its top and bottom lines. After reporting earnings last Wednesday, the stock rose more than 6.5% in strong volume. The oil stock is forming a double-bottom base.
The Houston-based company is trading below a 40.94 double-bottom buy point, according to MarketSmith pattern recognition. Shares of the oil stock fell over 12% on Monday, which now puts the stock more than 20% below the official buy point.
In other words, Ranger Oil certainly has some work to do in further building the right side of the new base before it becomes actionable.
A red flag on the chart? ROCC stock is trading below its 50-day moving average at this time. Shares were turned away by sellers at this important technical level this week. Shares closed slightly above this level after a very strong earnings report last week.
Remember, the stock market is in a correction, so investors should avoid new stock buys. Stocks setting up buy points such as Ranger Oil are good ideas for watchlists right now.
Oil Stocks To Watch: Ranger Oil
Last Wednesday, Ranger Oil reported quarterly earnings that well exceeded analyst expectations. Earnings of $4.68 per share beat analysts' estimates of $2.24 per share. EPS also increased 382% from a year ago. The company's revenue came in at $256.5 million, an increase of 190% on a year-over-year basis.
The firm is an independent oil and gas company and focuses on its Eagle Ford Shale project located in South Texas.
Ranger Oil produced stellar earnings growth in 2021, with EPS of $10.18, up 76% from the $5.77 it posted in 2020. In 2022, EPS is expected to reach $11.44, which represents growth of 12% from the year prior.
"We are off to a great start in 2022 as we continue to execute our business strategy, generate free cash flow and deliver returns for shareholders," said CEO Darrin Henke. "Our strong balance sheet, disciplined capital investments, and exceptional operational performance continues, yielding significant free cash flow and allowing us to strengthen our high-margin inventory through recently announced accretive acquisitions."
