Williams Cos. is Tuesday's IBD Stock Of The Day. The natural gas stock is in a buy range and riding a six-day rally as energy prices climb.
While natural gas prices fell Tuesday, prices have been elevated since August, with winter weather in the U.S. and geopolitical tensions in Eastern Europe sending U.S. prices in October and January to their highest levels since 2008. Russian troops massed at the border with Ukraine since early November have kept energy markets on edge. But Russian natgas supply to Europe rebounded Tuesday and the cold snap eased.
"Diplomatic efforts to drive more gas into Europe from other sources are ongoing; however, short-term prices remain highly exposed to small shifts in the supply-demand balance," RBC Capital Market analysts wrote in a note.
As the diplomatic crisis deepens, Europe has increased demand for shipments of U.S. liquefied natural gas or LNG.
Williams Co. builds pipelines and other natgas infrastructure. Its projects include a pipeline to serve Cheniere Energy's Sabine Pass Liquefaction export terminal in Louisiana. In addition, company pipelines and gathering facilities reportedly handle 30% of the natgas consumed in the U.S.
Natural gas prices fell 2.8% on Tuesday. But prices still remains elevated — futures closed up 46% last week as January contracts expired.
A Hot Natural Gas Stock: Williams
Williams shares rose 0.9% to 30.21 on the stock market today. The natural gas stock is breaking out from a cup-with-handle base with a 29.94 buy point, according to MarketSmith chart analysis. The buy zone extends to 31.44.
Williams' relative strength line, which tracks performance vs. the S&P 500 index, hit a new high in late January, ahead of the breakout — textbook bullish behavior. The natural gas stock has a Relative Strength Rating of 92 out of a best possible 99. Meanwhile, its EPS Rating is 87 and its Composite Rating is 97. The Composite Rating compiles scores on key fundamental and technical metrics: earnings and sales growth, profit margins, return on equity, and relative price performance. Investors should focus on stocks with a Composite Rating of 90 or higher.
Williams stock has a B- Accumulation/Distribution Rating. This suggests more buying than selling by institutional investors over the last 13 weeks.
Williams is the ninth-ranked stock in IBD's Oil & Gas-Integrated Group. Colombia's Ecopetrol SA is top stock in the group.
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