With fear over the fallout of Russia's invasion of Ukraine mounting, along with general inflation, prices of energy and oil stocks are rising and filling the coffers of oil companies. Callon Petroleum joins the IBD 50 Stocks To Watch list as the stock sets up in a ragged new base as the Texas oil explorer's earnings soar.
Bombs continued to explode in Ukraine and fighting was reported near the capital of Kyiv on Thursday, sending oil prices up over $100 a barrel.
Callon's shares have been working on a nondescript base that started when the oil stock hit a 52-week peak of 65.45. It meandered 37% down to a low of 41.26 on Dec. 20 and then gradually worked higher.
Though the base is choppy now, it has a few positive traits. In its current shape, the buy point is 65.55. The oil stock trades less than 21% below that entry.
Watch to see if the stock can rise above its interim high of 59.55 and then drift slightly slower for at least a week to form a handle. That could complete a cup with handle and present an early entry.
Other positives are the stock has a Relative Strength Rating of 97, an Earnings Per Share Rating of 90 and a perfect Composite Rating of 99.
Its relative strength line is trending gradually higher and is near new highs within its current chart pattern. Another plus: the oil stock is finding support at its 50-day moving average.
CPE stock ranks No. 3 in its industry group based on performance, according to Stock Checkup. The group itself ranks No. 1 among IBD's 197 industry groups. The U.S. 0il and gas U.S. exploration group also held that spot three weeks ago and six weeks ago. The group is up an average 24% this year, while the S&P 500 is down 12%.
This Oil Stock's Earnings Jump
Callon reported fourth-quarter and full-year earnings Wednesday. Q4 EPS leapt 166% to $2.66 from $1.00 a year earlier. Revenue rose 134% to $692 million.
For all of 2021, earnings ballooned 205% to $8.69 a share from $2.66. Sales rose 98% to $2.05 billion.
Wall Street analysts tracked by FactSet forecast EPS of $3.26 for Q1, up 199% from a year earlier, and $13.35 for 2022, up 54%. Sales are seen rising 49% in Q1 to $536.5 million and 3% in 2022 to $2.1 billion.
In its report, Callon said it achieved an operating margin of $48.71 per barrel of oil equivalent, up 130% from 2020.
The company said it has an operational capital budget of $725 million, with about 85% allocated to the Permian Basin.
It gave an annual production guidance of 101,000 to 105,000 barrels of oil equivalent per day (MBoe/d), with 64% of that expected from oil.
It also expects a transition to more efficient, larger scale development of recently acquired southern Delaware properties.
