Energy stock CVR Energy has been in a cup-with-handle base since the beginning of June. The company's 99 Relative Strength Rating is best in class.
CVR Energy is a holding company consisting of CVR Refining and CVR Partners, headquartered in Sugar Land, near Houston, Texas. CVR Refining is a petroleum refining and renewable fuels company with locations in Kansas and Oklahoma. Limited partnership CVR Partners is a nitrogen fertilizer producer, mainly of ammonia and urea ammonium nitrate (UAN) fertilizers, with locations in Kansas and Illinois.
CVR is ranked No. 7 in the Oil & Gas Refining industry group, which is ranked No. 12 out of the 197 industries IBD tracks. The group has slipped from the sixth spot three months ago, but is still highly ranked. The industry group holds a strong A+ Group RS Rating, which measures the group's relative performance in the last six months.
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Energy Stock In A Cup-With-Handle Base
Shares had a nice run to start June with the increased price of oil, then hit a high on June 7 after Credit Suisse raised its price target to 40 from 33. That was the start of the left side of the cup base. The 13-week-old base contains a 37% decline, a bit more than the maximum depth under CAN SLIM criteria, and a larger than desired 18%-deep handle. The base has a 37.73 buy point on the MarketSmith chart.
Shares are trading above the 21-day exponential moving average. The energy stock has a perfect 99 Relative Strength Rating, meaning it has outperformed 99% of publicly traded companies in the past 12 months.
Strong Sales With Earnings Catching Up
CVR Energy reported Q2 earnings on Aug. 1, with a beat on earnings per share, but missed analysts' sales expectations.
Mark Pytosh, CEO of the CVR Partners business, said in the earnings release: "Looking ahead, we expect industry conditions to remain strong due to attractive farm economics and elevated nitrogen fertilizer prices driven by natural gas shortages in Western Europe and dislocations created by Russia's invasion of Ukraine."
CVR Energy holds a high 95 Composite Rating but a less desirable 78 EPS Rating. Ideally we would like an EPS Rating of 80 or higher, and the higher the better.
The proprietary CAN SLIM EPS Rating combines the most recent two quarters EPS growth with its three- to five-year annual growth rate. CVR Energy's EPS Rating includes previous quarterly and annual losses, pulling the score down. Its bottom line turned positive in the March-ended quarter, with a 2-cent profit, accelerating to $2.45 in the June-ended quarter.
Annual EPS is a similar situation. Analysts estimate a positive EPS of $5.62 for 2022 after a loss of 55 cents a share in 2021. The expectation is for annual EPS to drop to $2.99 in 2023.
Quarterly sales growth ranged from an enviable 62% to 89% in the last three quarters. CVR has a three-year sales growth rate of 9%.
The Company Rewards Shareholders
CVR Energy announced a special cash dividend of $2.60 per share to shareholders on its earnings call, paid out Aug. 22. In addition, the company has a lofty 4.6% dividend yield. CVR Partners also declared a special cash dividend of $10.05 per common unit, also paid out on Aug. 22.
Mutual Funds have been adding the energy stock steadily, with 362 funds owning it in June, up from 318 in March and 302 in December. The stock has a C+ Accumulation-Distribution Rating.
