A play on energy independence

Why be a slave to foreign oil interest when we have oil and natural gas here at home?

By Jim Van Meerten Jan 7, 2010 11:22AM
Natural gas © Kevin Burke/CorbisTalking heads and politicians love to harp about finding new ways to make the U.S. less dependent on foreign oil and energy. Others say that oil isn't the answer and that natural gas is the way of the future.

My new favorite stock to add to my Wall Street Survivor portfolio is Vanguard Natural Resources (VNR).

The stock came up on my radar while I was using Barchart to screen for stocks hitting the most frequent new highs, and this one hit the top of my list, with 17 new price advances in the past 20 trading sessions and four new highs in the past five days. The stock has had a 44.32% price appreciation in the past 65 days and has buy signals on 12 of Barchart's 13 technical indicators for a 96% buy rating.

What made me fall in love with this stock is that it has what everyone seems to be looking for these days. The company focuses on developing natural gas and oil properties in the U.S. Most of their natural gas reserves are located in the southern portion of the Appalachian Basin. We don't have to worry about foreign interests, and since they explore for both oil and gas, we can have it either way.

On a fundamental basis, this stock makes money and has a following. Six brokerages follow the stock, and four have buy recommendations, with the other two a hold. No sell recommendations. The consensus is for a 30.4% increase in revenue next year and a 9.9% growth in earnings per share.

Before I put in my buy order, I checked to see what other sites are saying. Wall Street Survivor members have a 5/5 Survivor Sentiment rating, with a 4/5 fundamental and 5/5 technical rating. On Motley Fool CAPS members think the stock will out perform the market by a vote of 170 to 11, with the All Stars in agreement 61 to 1. The 3 Wall Street columnist that Fool follows like it 3 to 0.

I want to make a major point here before I receive criticism from any of you who are reading me for the first time. I try to find the stocks on my own. I do not buy them because they are popular with the analysts or other sites. I use these sources as a sounding board.

If I want to buy a stock, I look to see if others are trashing it. If I like it but others don't, then I give it a second look to see if they saw something negative that I was missing. I just like to have that second and third opinion, but I make my own finds.

This stock has what I like:
  • The stock is hitting new highs better than 50% of the recent trading sessions.
  • The stock has a following with no major trash talking.
  • Other sites have a similar favorable opinion.

Recommendation: I'm adding VNR to my Wall Street Survivor portfolio around $23.25 with a protective stop loss of not less than $19.


Disclosure: I held no positions in VNR at the time of this publication.


Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com



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